Vijay Mallya has been presently declared as an absconder by the Indian government, who apparently owes more than 9000 crores to the various banking institutions in India. But according to the latest news he claims to have around 5700 crore unpledged assets in his kitty. Although it is a good news for the banking sectors in India but it can turn out to really good only after the banks will manage to attach all of them to reality. The following reports will give you complete insight into this story.
According to the news published in the Bengaluru edition of Times of India, the banks are feeling positive about their recovery with the help of unpledged assets of Mallya which is running into 5700 crores. According to them, these assets can work as the backup for the guarantee provided by Mallya to the various banks in India. This will be in addition to the UB Holdings which will take care of the loans of 7000 crores that he took for his grounded Kingfisher Airlines.
But there is a little hitch and that is if Mallya denies cooperating with the banks then the attachments of these assets will take several years. According to sources, the pending salaries of employees are the priority at the moment claimed the sources. “There are several years of pending taxes, provident funds and dues of employees are the priorities at the moment,” said the sources. Banks also cannot invoke provisions of the law which allow them to directly attach a defaulter’s property as it is not pledged to them.
According to the sources, the banks have already managed to sell the shares of United Spirits worth Rs. 1,224 crore which was pleaded with them by Mallya. Another Rs 1,250 crore is stuck in courts. Of this, Rs 650 crore was deposited by SREI this was the excess amount recovered by the finance company through the sale of United Spirits shares to recover loans. Around Rs. 600 crore was deposited in the court following United Breweries Holdings’ (UBHL’s) sale of United Spirits shares.
The realization of the above amount which is presently locked in the courts will lead to the recovery of Rs. 2,494 crore by the banks. The banks also have plans of rising of another Rs. 150 crores from the auction of Kingfisher House which is the airlines erstwhile headquarters situated in Mumbai. The liquor baron’s Goa property Kingfisher Villa is expected to fetch about Rs 90 crore after banks execute a court order they have already obtained.
The sources have also revealed that the above recovery constitutes of only around 30% of the total due and for the remaining dues of Rs. 4,266 crore banks may need to pursue Mallya’s 32.8% of stakes in United Breweries which is presently valued at Rs. 6,724 crores. But according to the sources around 48% of Rs. 6,724 is already pledged, that leaves with only Rs. 3,494 crore worth of unpledged shares. UBHL is the holding company of UB Group. United Breweries is a separate group company in which Heineken is the largest shareholder.
While the recovery from Mallya’s personal assets would be limited to the extent of guarantees he has signed, banks can recover the balance from UBHL, which is also a guarantor. Mallya’s 32% shares in UBHL are worth Rs 72 crore, of which 14% are pledged. The unpledged shares are worth Rs 62 crore. Banks can also try and attach Mallya’s 22% shareholding in Mangalore Chemicals and Fertilisers, which is worth Rs 25.7 crore. The MCF shares are held partly through UBHL (15%) stake and another 7% by Mallya (through investment firms). However, nearly 18% of these shares are pledged.
UBHL also has a 55% share in Kingfisher Towers, an ultra-luxury residential project and office-cum-mall UB City in downtown Bangalore. UBHL’s share of Kingfisher Towers is 4.18 lakh square feet of super built-up area. At the peak price of Rs 33,000 /sqft, it was worth Rs 1,500 crore. But the slowdown in real estate has brought down the price. Also, some of UBHL’s shares have been used as securities against loans availed from HDFC. Mallya has a 55% stake in UB City, an 11-lakh sq ft commercial complex. The property is leased out and future rentals already securitized and funds used up.