Kingfisher Airlines is no longer a subsidiary: UB Holdings

UB Holdings says its exposure to Kingfisher totalled Rs 12,215.18 crore as on March 31, 2012

Vijay Mallya-led UB group's United Breweries (Holdings) Ltd today said Kingfisher Airlines has ceased to be its subsidiary, but it had a significant exposure of over Rs 12,000 crore to the air carrier.

Announcing its financial results for the fourth quarter ended March 31, 2012, which saw its net profit plunging sharply by over 83% to Rs 2.10 crore, UB Holdings said that Kingfisher ceased to be a subsidiary as on February 18, 2012, after the carrier alloted shares against optionally convertible debentures to certain entities.

Noting that it has given significant guarantees on behalf of its subsidiaries and associate companies, UB Holdings said its exposure to Kingfisher Airlines totalled Rs 12,215.18 crore as on March 31, 2012.

The company's exposure relating to Kingfisher Airlines is under various accounts including corporate guarantees to banks.

"The company has significant exposure on various counts to Kingfisher Airlines as on March 31, 2012. These include investment in equity/preference capital at Rs 2,118.48 crore, corporate guarantees to banks/aircraft lessors at Rs 8,925.86 crore," the filing said.

Total exposure include "advances at Rs 1,029.75 crore and other receivables Rs 141.09 crore", it said.

"Certain corporate guarantees have been invoked and Kingfisher Airlines is under negotiation in this regard with the beneficiaries," the filing added.

As on December 31, 2011, UB Holdings' stake in Kingfisher stood at 40.1%, but it declined to 34.55% on February 18, 2012 after an increase in the airline's equity base pursuant to issue of shares to some entities in lieu of certain convertible bonds.

As per the latest shareholding pattern available with the BSE, UB Holdings' stake in Kingfisher has declined further to 29.39% as on April 24, 2012. The entire holding of UB Holdings in Kingfisher is as such pledged, the BSE data shows.

UB Holdings further said that the development of a luxury residential building 'Kingfisher Towers-Residences at UB City' is under progress and it has entered into agreements to sell part of this project.

The agreements have been reached with prospective buyers for sale of six units of 8,321 square feet at the project, where UB Holdings' share is 4,18,388 square feet.

UB Holdings further said that its investment in subsidiaries have been considered as long term strategic investments and diminution in their market value, though significant is considered temporary in nature.

The company said guarantee commission has been accrued based on contractual obligation, although the recovery could take a longer period of time than what was anticipated.

UB Holdings has been giving significant guarantees on behalf of subsidiaries and other associated companies and advances to subsidiaries. No amount has so far devolved on the company, the filing said.