Mumbai: Creditors owed around 7,000 crore by the UB Group-promoted Kingfisher Airlines Ltd have started the process of selling the Kingfisher brand in an attempt to cut their losses.

The airline, promoted by flamboyant billionaire Vijay Mallya, has been grounded since October 2012.

Mint couldn’t immediately ascertain the impact of an impending sale on the beer brand “Kingfisher" owned by United Breweries Ltd, also controlled by Mallya.

SBICAP Trustee Co. Ltd (STCL), a wholly owned subsidiary of SBI Capital Markets Ltd, has sought a so-called expression of interest (EoI) from parties that wish to indicate their interest in acquiring the trademarks pertaining to the grounded Kingfisher Airlines.

The airline offered the Kingfisher brand as collateral to bankers. The Kingfisher brand was valued at 3,000 crore by audit firm Grant Thornton India some five years ago.

“SBICAP Trustee Co. invites EoI from parties who wish to indicate their interest to acquire the trademarks pertaining to Kingfisher Airlines on “as is where is" and “as is what is" basis. The interested parties may submit the EoI with indicative purchase price/s," SBICAP said on its website.

“The submitted EoI shall be considered solely for determining estimated market value of the trademarks and to determine interest of prospective buyers to acquire the subject trademarks," the EoI document said.

The list of trademarks offered include “fly kingfisher" (label), “fly kingfisher", “flying models", “fly the good times", “funliner", “kingfisher" and “flying bird device".

Ramesh Jude Thomas, president and chief knowledge officer of brand value management firm Equitor Management Consulting (Pvt.) Ltd, is sceptical that lenders will be able to sell the Kingfisher Airline brand.

“What is the future that a new user can expect with this logo on its tailfin?" Thomas said.

The airline brand drew its equity from the highly celebrated beer brand and its lifestyle positioning, Thomas said. “Therefore even the suggestion that what they were offering (as collateral) was an independent brand was a huge stretch. The clever bit was that while it was a Kingfisher product, the real receptacle of value, the beer brand, was completely protected from exposure."

Kingfisher Airlines’ operating licence was suspended in October 2012 by aviation regulator Directorate General of Civil Aviation following a strike by the airline’s employees. The permit has since expired, although it can be renewed within a period of two years.

Bankers admitted that STCL’s move to determine the valuation of the brand was a final attempt to recover whatever is possible.

“This brand has high recognition, so I would think that there would be some value in it. But yes I agree that this is the final attempt by us to recover (money)," said an executive at a creditor-bank on condition of anonymity.

However, some doubt that the sale of the brand will yield much.

“Mallya has very smartly separated himself from the fate of his company. This is now a desperate attempt by banks for a recovery. I do not expect anything from this," said another banker who is in the business of buying and restructuring bad loans.

A SBI Caps spokesperson did not respond to an email seeking comment.

A group of 14 lenders led by State Bank of India (SBI) expects to recover at least 1,000 crore as it starts taking possession of buildings, helicopters and other fixed assets of the grounded airline. The consortium collected 550-600 crore in the first phase by selling pledged shares of associate companies of Kingfisher Airlines’ parent UB Group.

On 14 February 2013, United Breweries, the parent company of Kingfisher Airlines, said that it fully owns the Kingfisher brand that is registered by the company under trademark classes pertaining to alcoholic beverages and that this hasn’t been hypothecated or pledged to any lender to secure loans, contradicting the contention of creditors to the airline.

A senior UB Group executive said the beer and airline brands were “different" and they are covered under different categories. “UB Group has not pledged the beer brand for loans to Kingfisher Airlines," he added.

A Kingfisher Airlines spokesperson did not offer any comment on the issue.

Kingfisher Airlines’ loss widened to 822.42 crore in the three months ended 31 December compared with a loss of 755.17 crore in the year-ago period.

With planes remaining on the ground, the airline had no sales in the reporting quarter, mirroring the zero sales in the year-ago period.

The Mumbai-based airline had accumulated losses of 16,023.46 crore on 31 March 2013 and its net worth was a negative 12,919.82 crore.

Kingfisher Airlines, launched in 2005, has never made a profit.

A surge in non-performing loans in India’s 84 trillion banking system has pushed banks to take an aggressive stance in recovering dues from borrowers by selling their pledged assets. The Reserve Bank of India (RBI) has emphasized the need for banks to take prompt steps to recover their money.

Gross non-performing assets (NPAs) at 40 listed banks rose 35.84% to 2.43 trillion at the end of the December quarter from 1.79 trillion a year earlier. About 4 trillion of bank loans are being restructured, both through RBI’s so-called corporate debt restructuring mechanism and on a bilateral basis.

Last week, RBI governor Raghuram Rajan warned bankers to avoid ducking a clean-up of their books by delaying the classification of assets that have turned sour as bad loans.

The weakest economic growth in a decade, high interest rates, slowing demand and delayed project approvals have hurt the ability of many corporate borrowers to repay debt. Growth slowed to 4.5% in the year ended 31 March 2013. In the fiscal year just gone by, growth is estimated by RBI at less than 5%.

In an October interview, Rajan stressed that company promoters and their creditors must share the pain of restructuring impaired assets.

“We have situations where groups are sitting on plenty of money, but that money is not feeding into projects that are in difficulty," he said then.

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