State Bank of India (SBI) has raised objections to the proposal of Captain Gopinath to float a budget airline saying that the company which he had led in the past is yet to repay loans.
Confirming the development, SBI managing Director and CFO Diwakar Gupta said the bank had written to the Directorate General of Civil Aviation (DGCA) registering its objections to Gopinath’s proposal. “Yes, we have sent a letter to DGCA stating our concern,” Gupta told the news agency. Promoted by Gopinath, Deccan Cargo and Express logistics Pvt ltd which ran Deccan 360, grounded since May 2011, owes about Rs500 crore to various banks.
SBI has an exposure of about Rs150 crore in the company which is in default of about Rs500 crore of loan. Gopinath, who sold his low cost carrier Air Deccan to liquor baron Vijay Mallya promoted Kingfisher Airlines in 2007, applied for a licence to start another airline in 2012.
The other lenders include Axis Bank and Syndicate Bank. These banks have already initiated the recovery process. last month, an advertisement issued by the bank invited bidders to participate in an e-auction of 9,000 sq ft office space, owned by Deccan Cargo and Express logistics in Embassy Square located on Infantry Road, to recover the dues.
The bank had set a reserve price of Rs28.33 crore for the sale of Gopinath’s office space. In 2011, SBI and other banks including IDBI Bank converted Rs1,400 crore debt of Kingfisher Airlines into equity at a price of Rs64.48 per unit, a premium of 35 per cent to the prevailing stock price.
Kingfisher was grounded by DGCA in October 2012 and the carrier submitted a fresh revival plan to DGCA, seeking permission to resume operations in April. It has not been accepted yet by the regulator on the grounds that it did not have no-objection certificates from various stakeholders including airports, bankers and oil marketing firms.
Of over Rs7,000 crore exposure to the 17 lenders, SBI has the maximum exposure of over Rs1,600 crore in the airline. It is followed by PNB (Rs800 crore), IDBI (Rs800 crore), Bank of India (Rs650 crore) and Bank of Baroda (Rs550 crore).
Banks have started recovering dues from the carrier and have recouped around Rs1,000 crore as of now. “KFA recoveries are going on. We have substantial amount of recoveries. Total recoveries for banks more than Rs800-1000 crore,” SBI Chairman Pratip Chaudhuri had said recently.