Money & Banking

Kingfisher House auction: Lenders halve reserve price to ₹75 crore

K Ram Kumar Mumbai | Updated on March 19, 2018 Published on March 19, 2018

A view of Kingfisher House in Mumbai. After each of the previous six unsuccessful auctions, lenders have brought down the reserve prices by 10-15 per cent.- PTI   -  PTI

Property put up for sale for the 7th time; auction slated for next week

The 17-lender consortium led by State Bank of India has put Kingfisher House on the block for the seventh time with the reserve price halved to ₹75 crore against ₹150 crore set at the first auction in March 2016.

Lenders took physical possession of Kingfisher House, which is situated at Andheri (East) in suburban Mumbai, in February 2015, after the now defunct Kingfisher Airlines defaulted on loans aggregating about ₹6,203 crore as on May 31, 2015. The auction of this property is slated for next week.

Bidding for the property, which has a built-up area of 1,586.24 square meters, in the previous six auctions was unsuccessful due to various reasons, including high price and downturn in the economy and real estate market.

After each unsuccessful auction, lenders brought down the reserve prices by about 10-15 per cent in a bid to sell Kingfisher House, but to no avail.

“Investors always look at return on asset. If an asset cannot be put to good economic use or does not fetch adequate returns, they will shy away from bidding, resulting in lenders having to mark down the reserve price at the next auction. “If lenders are unable to make any headway in the auction of Kingfisher House, then they should explore the possibility of letting it out and earning rental income,” said a senior public sector banker.

Going by the recovery certificate issued by the Debt Recovery Tribunal, Bengaluru, in February 2017 — in the case of State Bank of India and others versus Kingfisher Airlines and others — for recovery of ₹6,203 crore, with further interest thereon at the rate of 11.50 per cent per annum with yearly rests with costs and charges, the loan exposure of lenders has swelled to over ₹9,500 crore.

United Breweries (Holdings) and Vijay Mallya are guarantors to the loans taken by Kingfisher Airlines.

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Published on March 19, 2018
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