Banks recall KFA loans, may encash Mallya’s securities

New Delhi/Mumbai: After waiting for almost a year, lenders led by State Bank of India on Tuesday decided to recall loans given to Vijay Mallya’s Kingfisher Airlines and encash shares that have been pledged with banks as collateral.

Subsequently, if loans adding up to Rs 7,500 crore and overdues of over Rs 1,000 crore are not repaid by the flamboyant businessman, who often drew comparisons with Virgin’s Richard
Branson, lenders will encash other securities, including Mallya’s personal guarantee and property. Already, banks are in the process of selling his villa in Goa to recover part of the dues.

Lenders will set up a subgroup that will look at the legal aspects of selling the shares, said a banker. A loan recall is an extreme step when banks are convinced that there is nothing that the promoter can do to revive a sick company. In Mallya’s case, the wait has been longer. With no end in sight, 17 banks that have exposure to the airline, once the symbol of luxury in the skies, finally decided to take the call at a meeting on Tuesday.

“The guarantees are in excess of loans outstanding. The personal guarantees will be invoked along with the loan recall. The recall process will include legal action against Mallya and Kingfisher Airlines,” a bank executive said.

BAD TIMES

• Kingfisher Air’s debts and other exposures add up to - 7,500 crore
• Overdue payments to banks amount up to - over 1,000cr
• If KFA is unable to settle lenders’ claims, banks may start encashing securities, including Mallya’s personal property

Shares owned by Mallya that are pledged to banks may be the first to be encashed End of road for Kingfisher Airlines?
New Delhi/Mumbai: The SBI-led consortium of lenders to KFA were disappointed that there was no proposal by Vijay Mallya to bring in substantial capital, which they had earlier hoped would happen after the liquor baron sold a big chunk of his business to UK’s Diageo. He said the banks could take legal opinion on how to deal with the Kingfisher brand which forms a major chunk of the collateral offered by the airline. Kingfisher—which Mallya launched as a gift for his son on his 18th birthday-—has been unable to come up with a feasible plan to restart operations, and its lenders’ consortium has decided that it is difficult to sustain the loan in such a situation, SBI deputy managing director Shyamal Acharya said.

While airline executives did not answer calls, Kingfisher CEO Sanjay Agarwal continued to put up a brave face. “Mr (Vijay) Mallya has assured salary payments, and we are currently working on a plan to fly again in the summer schedule,” Agarwal was quoted by a TV channel.

But the writing on the wall was clear for KFA which had stopped flying from October last year and did not have any slots in the winter schedule prepared by the Directorate General of Civil Aviation (DGCA).

Without a licence, it would be impossible for the airline to be part of the summer schedule that the DGCA is shortly finalizing.

“It is almost the end of the road for Kingfisher. The Airports Authority of India has already decided to give KFA’s slots to any airline that wants them. Now, even the private metro airports will do the same,” said an aviation official.

For Mallya, the pressure has been mounting as he has not paid salaries to employees. In fact, the wife of a Kingfisher employee committed suicide citing financial stress due to non-payment of salary. Besides, the “king of good times” has not deposited service tax collected from travellers and there are income tax arrears. There are arrears to oil companies as well as airport operators.

The financial woes have also impacted the bankrupt airline chief, prompting him to sell a stake in flagship United Spirits to Diageo in a bid to get much-needed cash. He even offloaded shares in Force India, his Formula One team, to Sahara.

But his personal lifestyle has not shown any dramatic change and despite not paying salaries and repeatedly defaulting on payments, Mallya has been visiting temples, including Tirupati, where he offered 3kg of gold.

Under pressure to keep the airline sector afloat, the government even changed rules, including allowing foreign carriers to buy 51% stake in Indian entities. While Jet Airways and Spice-Jet are close to tying up deals, Kingfisher has not been able to make much headway.

BANKING ON SECURITIES
Vijay Mallya had agreed to provide a long list of assets as security while finalising a loan restructuring in 2011. Now, banks will enchash these securities to recover the dues
Assignment/ hypothecation of ‘Kingfisher’ brand First charge on fixed assets, including equitable mortgage of Kingfisher House in Mumbai Equitable mortgage of Kingfisher Villa, Goa Mallya’s personal guarantee Corporate guarantee of United Spirits Escrow of credit card receivables, cash collections Non-disposal undertaking on 11 lease/ hire purchase aircraft Hypothecation of two helicopters

Pledge of shares by promoters

First charge on 2.6 million United Spirits shares and 10 million shares of Mangalore Chemical & Fertilisers that are pledged to SBI

Extension of charge on entire current assets
Maintenance of account servicing up to three months interests and instalments from Oct
Courtesy:
TIMES NEWS NETWORK
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/02/13&PageLabel=3&EntityId=Ar00302&ViewMode=HTML

SBI sends Kingfisher legal notice to recover its loans

Banks unsure of recovery despite selling USL shares
State Bank of India (SBI) has sent the beleaguered Kingfisher Airlines (KFA) a legal notice relating to the recovery of loans, bankers said on Tuesday. KFA can either suggest an out-of-court settlement or take legal recourse, in which case bankers will move the debt recovery tribunal (DRT), a banker explained.

Although the lenders have sold shares of United Spirits (USL) and Mangalore Chemicals and Fertilisers, banks are still not confident of recovering their entire loans from KFA. “It looks like we will have to invoke the corporate guarantees given by United Breweries Holdings (UBH) to recover the loans,” a banker with direct knowledge of the development said.

Last week, a consortium of 17 lenders, led by State Bank of India (SBI) sold off 26.5 lakh shares of USL. Banks had also sold pledged shares of Mangalore Chemicals and Fertilisers, realising around R100 crore.

KFA owes over R7,000 crore to lenders as per news reports. Consortium leader SBI has maximum exposure to Kingfisher at R1,800 crore.

Other lenders to the grounded airline are Punjab National Bank and IDBI Bank (R800 crore each), BoI (R650 crore), Bank of Baroda (R550 crore), United Bank of India (R430 crore), Central Bank of India (R410 crore), UCO Bank (R320 crore), Corporation Bank (R310 crore), State Bank of Mysore (R150 crore), Indian Overseas Bank (R140 crore), Federal Bank (R90 crore), Punjab and Sind Bank (R60 crore) and Axis Bank (R50 crore).

In his appeal to the Bombay High court on April 1, the debt-laden airline’s promoter Vijay Mallya had sought to restrain banks from selling the USL shares pledged with lenders for three weeks. However, the court ruled in favour of the banks the very next day, allowing them to go ahead with share sales to recover loans.

The UB Group, also promoted by Mallya, had reached an agreement with UK-based global liquor giant Diageo for sale of a majority 53.4% stake in USL for about $2 billion. The Diageo deal is currently in the process of completion and has been cleared by regulators like Competition Commission of India and Securities and Exchange Board of India. The deal includes an open offer for purchase of 26% stake from non-promoters.

Air pocket
* KFA can either suggest an out-of-court settlement or take legal recourse
* Last week, lenders led by SBI sold off 26.5 lakh shares of USL
* Shares of Mangalore Chemicals were sold for around R100 crore
* KFA owes over Rs.7,000 cr to lenders. SBI has maximum exposure at Rs.1,800 cr
Courtesy:
feBureau: Mumbai, Apr 10 2013, 01:55 IST
http://www.financialexpress.com/news/sbi-sends-kingfisher-legal-notice-to-recover-its-loans/1099920/0

यूनाइटेड ब्रुअरीज पर टैक्स चोरी का आरोपः सूत्र

किंगफिशर एयरलाइंस की आर्थिक तंगी से परेशान विजय माल्या के लिए एक और नई मुसीबत आ गई है। सीएनबीसी आवाज को मिली एक्सक्लूसिव जानकारी के मुताबिक विजय माल्या की कंपनी यूनाइटेड ब्रुअरीज में सर्विस टैक्स चोरी का मामला सामने आया है। इस बारे में सर्विस टैक्स डिपार्टमेंट ने यूनाइटेड ब्रुअरीज को टैक्स रिकवरी का नोटिस भी भेजा है।

सूत्रों का कहना है कि यूनाइटेड ब्रुअरीज में 21 करोड़ रुपये की सर्विस टैक्स चोरी पकड़ी गई है। लिहाजा सर्विस टैक्स डिपार्टमेंट ने यूनाइटेड ब्रुअरीज पर टैक्स चोरी के बराबर की रकम यानि 21 करोड़ रुपये जुर्माना भी लगाया गया है। ऐसे में यूनाइटेड ब्रुअरीज को 42 करोड़ रुपये की रकम जमा कराने का नोटिस जारी हुआ है।

सूत्रों के मुताबिक ये मामला यूनाइटेड ब्रुअरीज के औरंगाबाद प्लांट से जुड़ा हुआ है। साथ ही सर्विस टैक्स डिपार्टमेंट यूनाइटेड ब्रुअरीज के 13 दूसरी यूनिट में भी सर्विस टैक्स चोरी की जांच कर रहा है। यूनाइटेड ब्रुअरीज ने सितंबर 2009 से नवंबर 2011 के बीच सर्विस टैक्स नहीं चुकाया है।

सूत्रों की मानें तो यूनाइटेड ब्रुअरीज को प्लांट के लिए बाहर की एजेंसी से काम करवाने के एवज में सर्विस टैक्स चुकाना था। सर्विस टैक्स डिपार्टमेंट ने नोटिस के तहत 30 दिनों के भीतर रकम जमा कराने का आदेश दिया है।
साभार:
प्रकाशित Wed, जनवरी 09, 2013 पर 11:30  |  स्रोत : CNBC-Awaaz
http://hindi.moneycontrol.com/mccode/news/article.php?id=71631

KFA’s 15 leased planes may land in scrapyards

New Delhi: A majority of the 15 leased planes that still remain on Kingfisher Airlines’s (KFA) name may be headed to the scrapyards. While 13 aircraft leased to the grounded airline have been de-registered from the airline’s name and will now be flown out of India, lessors of 15 planes have discovered that their Airbus planes are in simply no condition to fly.

“These lessors have discovered that aircraft parts have been so badly cannibalized that it is very difficult to restore the planes. In its last few months of operation (KFA stopped flying from October 1, 2012), the airline kept taking parts from its fleet to keep a handful of planes airworthy. Now the planes have been ravaged beyond repair and they can’t fly,” said a senior Airports Authority of India (AAI) official.

The planes rendered unfit to fly are the Airbus A-320s, each of which today costs upwards of Rs 500 crore and leasing a new one costs about Rs 2 crore per month at current rates. Now AAI brass are going to hold an internal meeting this week to see how precious airport parking slots occupied by these planes across Indian airports could be freed up. “The only way for these aircraft may be the junk yard. Lessors will drag KFA promoters to court to recover their losses,” the official said.

Lessors have not even applied to the Directorate General of Civil Aviation (DGCA) to get these 15 planes de-registered.

The reason: While allowing some planes to be de-registered last month, DGCA chief Arun Mishra had ruled that lessors will have to pay parking charges to airports from the date their planes cease to be in KFA’s name to the date they fly out. Something these 15 planes can’t do.

KFA till recently had 40 planes — 10 owned by it and 30 leased. Of the 30 leased, 15 are stuck on ground and 13 were de-registered. Two aircraft have been seized by service tax authorities. Aviation secretary K N Shrivastava recently met the tax authorities for freeing these planes but since they are coowned by the airline, they remain impounded.

Shrivastava, who is trying to restore India’s credibility in the eyes of foreign aircraft lessors so that other desi carriers do not find it tough to rent planes, recently made it possible for lessors to start re-possessing their planes rented to KFA but which had been impounded by various agencies the airline owed money, like airports, banks and tax authorities.

JUNKED JETS?
• In its final months of operations, KFA took parts from its fleet to keep a handful of planes airworthy
• Now 15 of these planes have been found to be ravaged beyond all repair and they can’t fly
• These are Airbus A-320s, each costing over Rs 500cr and leased for Rs 2cr a month
Courtesy:
Saurabh Sinha TNN
http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=TOIM/2013/04/08&PageLabel=19&EntityId=Ar01903&ViewMode=HTML

Kingfisher lenders unsure about quantum of recovery

NEW DELHI: Even as lenders with over R7,000- crore exposure to the ailing Kingfisher Airlines have decided to sell pledged shares of United Spirits Ltd (USL) and invoke his personal guarantee to recover chunks of debt, they remain unsure of the quantum of recovery.

The recovery exercise is likely to fetch them an amount “which could be half of the total debt,” said banking sources. Besides, it is also likely to be a time-consuming affair.

“Though banks have decided to go all out with the recovery exercise, we, in all likelihood would fall hugely short of the total amount and that is worrying for banks and what is worse is the fact that Mallya has no intention of repaying the loan amount,” a senior executive of one of its private sector lenders told HT on the condition of anonymity.

The consortium of 15 banks led by the State Bank of India has recently embarked on the recovery process. SBI has an exposure of R1,410 crore to the beleaguered airline, promoted by UB Group chief Vijay Mallya. IDBI Bank, Punjab National Bank (PNB) and Bank of India (BoI) have exposures to the tune of R719 crore, R702 crore and R552 crore respectively to Kingfisher.
Courtesy:
    8 Apr 2013
    Hindustan Times (Mumbai)
    HT Correspondent letters@hindustantimes.com
http://paper.hindustantimes.com/epaper/viewer.aspx

Tax Haven Expose: Govt probing those named in tax haven expose: Chidambaram

Two days after The Indian Express reported that an international group of investigative journalists had found details of more than 1.2 lakh offshore entities and trusts belonging to individuals and companies of more than 170 countries and territories including India, Finance Minister P Chidambaram said an inquiry had been initiated against persons named in the report.

The report lists 612 Indians, including two members of Parliament — Lok Sabha Congress MP Vivekanand Gaddam and Rajya Sabha member Vijay Mallya — and several industrialists.

Several offshore investments were made in possible violation of RBI and FEMA rules. The investments were made in tax havens including British Virgin Islands, Samoa, Cook Islands.

Asked at a press conference on Saturday whether the government had taken any action on the report, Chidambaram said: "Yes. We have taken note of the names and inquiries have been put in motion in respect of the names that have been exposed."

Details of transactions in the tax havens were obtained by the International Consortium of Investigative Journalists (ICIJ).

The ICIJ collaborated with 38 media organisations around the world, including The Indian Express, for this global project.
Courtesy:
ENS Economic Bureau : New Delhi, Sun Apr 07 2013, 02:40 hrs

Tax Haven Expose: Global media investigation finds 612 Indian firms in tax havens

In the biggest global expose of its kind on offshore investments and secret financial transactions, an international group of investigative journalists has found details of more than 1.2 lakh offshore entities and trusts belonging to individuals and companies in more than 170 countries and territories, including India.

These individuals and companies include politicians, the mega rich and tax offenders, among others, who have invested in tax havens such as the British Virgin Islands, the Cook Islands, Samoa and other offshore hideaways.

The 612 Indians in this list include two members of Parliament — Lok Sabha Congress MP Vivekanand Gaddam and RS member Vijay Mallya — and several industrialists such as Ravikant Ruia, Samir Modi, Chetan Burman, Abhey Kumar Oswal, Rahul Mammen Mappillai, Teja Raju, Saurabh Mittal and Vinod Doshi.

The list also includes businessmen who have had a brush with authorities such as the Income-Tax department and the CBI. Several of the offshore investments were made in possible violation of RBI and FEMA rules.

Details of these transactions were contained in 2.5 million secret files and accounted for more than 260 gigabytes of data. They were obtained by the International Consortium of Investigative Journalists (ICIJ) and their total size is more than 160 times larger than the leak of the US State Department documents by Wikileaks in 2010.

Based in Washington DC, ICIJ (www.icij.org) is an independent network of reporters who work together on cross-border investigations.

ICIJ collaborated with 38 media organisations around the world, including the The Indian Express, for this ambitious global project and to analyse the documents. The other media partners include The Washington Post in the US, The Guardian and BBC in Britain, Le Monde in France and the Canadian Broadcasting Corporation.

The secret files provide facts and figures — cash transfers, incorporation dates, links between companies and individuals — that illustrate how financial secrecy has spread aggressively around the globe. They represent the biggest stockpile of inside information about the offshore system ever obtained by a media organisation.

Besides several well-known Indians, the lists include American doctors and dentists, middle-class Greek villagers as well as families and associates of long-time despots, Wall Street swindlers, East European and Indonesian billionaires, Russian corporate executives and international arms dealers.

These people used international financial services providers such as the Portcullis Trustnet (PTN) of Singapore and the Commonwealth Trust Limited (CTL) in the British Virgin Islands to register offshore companies in tax havens. PTN and CTL, it has been found, have helped tens of thousands of people set up off-shore companies, personal financial trusts and hard-to-trace bank accounts.

Anti-corruption campaigners argue that offshore secrecy undermines law and order and forces average citizens to pay higher taxes to make up for revenues that vanish offshore. The stolen asset recovery initiative, a programme of the Wold Bank and the United Nations, has estimated that cross-border flows of global proceeds of financial crimes total between $1 trillion and $ 1.6 trillion a year.

On the other hand, offshore defenders counter that most offshore patrons are engaged in legitimate business transactions. Offshore centres, they say, allow companies and individuals to diversify their investments, force commercial alliances across national borders and do business in entrepreneur-friendly zones that eschew the heavy rules and redtape of the onshore world.

The 15-month long investigation has found that alongside perfectly legal transactions, the secrecy and lax oversight offered by the offshore world allows fraud, tax dodging and political corruption to thrive. The expose has also thrown light on the functioning of "nominee directors'' in offshore companies, several of whom have also been engaged by Indian patrons of offshore companies.

For instance, a cluster of 28 "sham directors'' have been identified as having served as the on-paper representatives of more than 21,000 companies between them, with some individual directors representing as many as 4,000 companies each.

The expose comes shortly after a list of 18 Indians who had bank accounts in the LGT Liechtenstein Bank and around 700 Indians who had accounts in HSBC in Geneva became public. In both cases, account holders were prosecuted and paid penalties to Income-Tax authorities for deposits they had made abroad without paying taxes in India.

Incidentally, India had signed a double taxation treaty called the Tax Information Exchange Agreement with the BVI in 2011 to check tax evasion and money laundering from the tax haven. Finance ministry officials said that similar agreements are in the process of being drafted with the Cook Islands and Samoa.

While the Liberalized Remittance Scheme 2012 permits Indians to deposit up to $200,000 abroad annually, the RBI has made it clear that this does not include deposits in tax havens. "As yet, the $200,000 facility for remittances abroad is not applicable for individuals to open accounts or companies in tax havens," a RBI spokesperson told The Indian Express.

Auditors said the legality of holding offshore accounts and registering offshore companies is complex. The RBI restriction on individuals incorporating companies abroad, they said, can be easily circumvented if an offshore company is first incorporated and the shareholding then transfered to the beneficial owner.

In the cases under scrunity, documents show that both patterns have been followed. The date of incorporation and the date of the patrons being appointed shareholders/directors is either identical — which is a violation of RBI guidelines — or is a month or so later. If it is the latter, these individuals can say they just acquired shares of an offshore company.

However, with individuals debarred from using LRS for setting up companies, even the remittance dispatched by them for setting up an offshore entity can be a violation. Under rules of the Foreign Exchange Management Act (FEMA), the use of the offshore route to bring in FDI is also prohibitted and is a violation of Section 8 of the act.

There is also a restraint on individuals setting up offshore companies without the prior approval of the RBI.

MEGA BYTES
* 15-month investigation based on 260 GB data in 2.5 million secret files including 2 million emails covering nearly 30 years

* Data had details of over 1.2 lakh offshore firms/trusts and 12,000 agents

* Owners, benefactors of offshore accounts spread across more than 170 countries, territories

* 86 ICIJ journalists from 38 media organisations in 46 countries collaborated in investigation

* Data found 28 'sham directors' who together represented 21,000 firms
Courtesy:
Ritu Sarin , ICIJ REPORTERS : New Delhi, Washington, Thu Apr 04 2013, 08:45 hrs
http://www.indianexpress.com/news/global-media-investigation-finds-612-indian-firms-in-tax-havens/1097501/0