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Business News/ Companies / News/  UB Group to keep funding Kingfisher
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UB Group to keep funding Kingfisher

Kingfisher owes United Breweries (Holdings) Rs2,359.25 cr in loans and advances as of 31 March

Kingfisher Airlines chairman Vijay Mallya. Photo: Mint (Mint)Premium
Kingfisher Airlines chairman Vijay Mallya. Photo: Mint
(Mint)

Bangalore/Kochi: United Breweries (Holdings) Ltd (UBHL), the holding company of Vijay Mallya’s debt-laden UB Group, loaned more than 1,300 crore to the group company Kingfisher Airlines Ltd in the year ended 31 March and plans to keep funding the grounded airline for now.

Kingfisher now owes UBHL 2,359.25 crore in loans and advances as of 31 March, up from 1,048.7 crore a year earlier. Apart from the loans, UBHL also has equity investments of 2,095.30 crore in Kingfisher, has given a corporate guarantee of 8,964.38 crore for the company’s debt, and is owed an additional 310.45 crore by the airline.

UBHL’s board “at an appropriate time will discuss the merits of commissioning an in-depth study to assess the recoverability of the amounts advanced to Kingfisher as part of its strategic review of all core investments. Meanwhile, in order to keep its investment prospects alive, your board has decided to keep the airline funded on a need basis," the company said in its annual report for the year ended March. Kingfisher’s operating licence was suspended in October by the Directorate General of Civil Aviation (DGCA) following a strike by its employees. The permit expired on 31 December 2012, but it can be renewed within two years.

“A revival plan has been submitted to DGCA which is under consideration. Further, discussions are in progress with some prospective investors for restarting the airline operations which of course will be subject to statutory and regulatory approvals," UBHL said.

The airline is hopeful that UB Group will be able find an investor shortly as airline chairman Vijay Mallya is in talks with a strategic investor for a fund infusion, a Kingfisher Airlines executive said, requesting anonymity.

“UB Group is in talks with a local investor for some time for an investment. We would be able to sign a term sheet and submit a phased re-start plan shortly," he added, without disclosing details of the time frame and the identity of the investor. A UB Group spokesperson declined to comment.

As of 31 March, UBHL’s long-term loans to units rose to 3,432.85 crore from 1,959 crore last year. Whereas unsecured loans taken by UBHL rose to 696.74 crore from 240.13 crore a year ago.

UBHL also disclosed that income-tax authorities were seeking 94.88 crore from the company and it has appealed the demand. The amount allegedly owed by UBHL to the tax authorities has risen from 23.42 crore last year, according to the annual report. Last month, the company named V. Shashikanth as its new managing director, replacing Harish Bhat, who also resigned from the board.

UK-based distiller Diageo Plc., which is now the largest shareholder in UB Group’s United Spirits Ltd, was moving as many as 100 UB Group executives off the payrolls of United Spirits, Mint reported on 21 August. UBHL will now likely have to pay the salaries of these executives.

UBHL will hold its annual shareholders’ meeting on Thursday.

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Published: 12 Sep 2013, 12:10 AM IST
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