"The company does not have any assets to hypothecate and there is no room for fresh debt," said Pratip Chaudhuri, chairman, SBI. He added that banks are giving time to its founder Vijay Mallya to get an investor. "If we pull the plug now, that too would be irretrievable. If we are patient with him, there are chances that he may revive (the company)," said Chaudhuri.
In the meeting held in September, Kingfisher had asked for immediate funding from the lenders. The request was turned down when the management met lenders again last week. Troubles at the airline company have intensified since its employees are on strike. Kingfisher has not paid salaries for past seven months.
Chaudhuri said that the money released by tax authorities would be given back to the company for paying salaries. "In the lender's meet it was decided that whatever the money that is being unfrozen by the tax authorities, 80 per cent of that is being made available to the company, specifically towards payments of salaries," said the SBI chairman.
He said the decision was taken on humanitarian grounds. The leeway is on the condition that the company will use the money completely for payment of salaries.
With outstanding debt of over Rs 7000 crore, Kingfisher has slipped in the non-performing assets (NPA) category of most banks which include SBI, Bank of India, Bank of Baroda and Punjab National Bank. Its loans were restructured in November 2010 under industry dispensation. However, the company started defaulting on its payments and turned into NPA for most lenders in the second half of financial year 2011-12.
The company's management has not been able to come out with a solid plan to revive its fortunes despite holding several meetings with the lenders. "If we pull the plug now, all the possible investors would walk away. Having waited so long, might as wait a little longer," said Chaudhuri.