Kingfisher Airlines’ stock slumped 5 per cent to Rs 10.55 on the NSE in the opening trade, after banks said that they are considering to recover Rs 7,000-crore loans that they had lent to the company.
The stock, however, recovered slightly to trade at Rs 10.70, still a fall of 3.6 per cent over the previous day’s close. The stock was very active with 1.19 crore changing hands till 11 a.m. on the NSE.
The move by a consortium of 17 banks could be the end of the road for the beleaguered Kingfisher Airlines. Bankers described the consortium’s decision as unanimous. Loan recall normally triggers initiation of recovery proceedings.
“Despite several rounds of meetings over the last year or so, the management of the country’s once second-biggest airline did not come up with any concrete plan of action for pumping in funds to get the grounded airline up and flying,’’ said the bankers.
According to Shyamal Acharya, Deputy Managing Director, State Bank of India, the bankers’ consortium has run out of patience.
“We (the full consortium of banks) first met in December. After that, there were two small group meetings. The consortium has given the airline almost two months time but they have not been able to come up with any concrete development on any front.
“The consortium felt that it will be difficult to give the airline any more time, so it is a case for terminating the relationship,” said Acharya. As giving a loan is a decision of the bank’s board, recalling the loan is also its decision.
So, each bank will brief its board about the position and a final decision will be taken by the consortium in the next 7 to 10 days.
On the basis of today’s decision, Acharya said, if the bankers decide to recall the loans, legal action will follow.
A decision on further action will now be taken by the boards of the 17 creditor banks, after which the consortium will take a decision on valuing the assets and potentially pursuing legal options, Acharya said, adding that it is a lengthy process.