Tuesday, 28 February 2012

Tell the Prime Minister to stop helping Vijay Mallya with taxpayer money

Some ministers of the Government of India have expressed their sympathies with Mallya because this billionaire has driven Kingfisher Airlines to bankruptcy and is now demanding that the entire republic bear the burden of his private business.

Some citizens led by Ms Aruna Roy have written to the Prime Minister to tell him that the government should stop supporting Kingfisher Airlines, Vijay Mallya's bankrupt business, with public funds.
If you wish to support the cause or say anything in the matter, you may like to write to Ms Roy or Mr. Nikhil Dey of Mazdoor Kisan Shakti Sangathan (MKSS) on arunaroy@gmail.com  OR nikhildey@gmail.com
The letter to the PM can also be read on http://www.moneylife.in/article/activists-urge-pm-not-to-bailout-kingfisher-airlines-using-public-funds/23947.html
At the bottom of this message is an outline of how Mallya --- who owes his personal fortune of about Rs 7000 crore primarily to a transnational liquor business with annual sales of Rs 19,600 crore --- is currently being supported fully by his friends in the government through public-sector banks at a huge expense to the taxpaying citizens.
It's a case study in crony capitalism and kleptocracy that India has become.
While his friends in the government are buying time for him, Mallya is currently going around telling potential foreign investors that the Government of India is fully behind him and that he can even get the law changed --- if the law is what is needed to be changed.
Mallya told The Times (of London) on 27 Feb 2012 that he had "secured provisional approval from the government for a change in the law that would ease restrictions on foreign ownership of Indian airlines."

1. An unviable airline, Kingfisher Airlines, is being supported via taxpayer-funded financial institutions on the diktat of the regulatory authorities involving various ministries of the Government of India, wrote Veritas Investment Research, a Canadian equity research firm, in September 2011.

2. The airline owes over Rs 300 crore to the income tax department.

3. Kingfisher Airlines is also in default of the dues – such as provident fund and insurance premiums – owed on behalf of its employees to regulatory authorities. Most of the employees of Kingfisher Employees have not been paid their salaries for over two months.

4. The loans given by the State Bank of India and other public-sector banks to Kingfisher Airlines are impaired and the banks have been made to convert some of these unpaid amounts into shares that have no value, Veritas wrote last September.

5. The State Bank of India and other public-sector banks own about a fifth of Kingfisher's shares and three-quarters of its debt of over Rs 7000 crore.

6. In the last two months, Mallya's friends in the government have moved fast to change regulations in order to help his bankrupt business --- airlines can now directly import fuel, lowering their costs, and private carriers can fly overseas more.

7. Here are some news reports that bear out the serious commitment shown by the Prime Minister and some of his ministers in maintaining the business life style of Vijay Mallya.

Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth.
Kingfisher needs to be helped out: Manmohan Singh
DNA, Nov 13, 2011
Prime Minister Manmohan Singh on Saturday assured that the Government would find ways to get Kingfisher Airlines out of the trouble, just when civil aviation minister Vayalar Ravi seemed to have distance himself from any “bailout” for the troubled airline.
Ravi’s clarification follows criticism by both, the Congress and the BJP on Friday of any move by the government to bail out Kingfisher.
Kingfisher Airlines has to be saved: Corporate affairs minister Veerappa Moily
PTI, 21 Feb 2012
NEW DELHI: Amid criticism from all quarters, beleaguered airline Kingfisher's promoter Vijay Mallya today got some sympathy from corporate affairs minister Veerappa Moily who came out in his support saying the carrier "has to be saved".
Moily said Mallya has met him as both of them hail from Karnataka and that he should work out a strategy acceptable to the finance ministry.
“Of course he (Vijay Mallya) has met me because he hails from Karnataka ... That (Kingfisher) has to be saved. He has to work out a strategy that will be acceptable to the finance minister and his ministry. He has a vibrant airline. And it has given excellent service ... I wish him well,” Moily said.
The airline, which has an outstanding debt of over Rs 7,057.08 crore (according to the latest figures), has requested the consortium of lenders, led by SBI, for a working capital support of Rs 200-300 crore.

Good if banks want to loan money to Kingfisher: Civil Aviation Minister
NDTV, 22 Feb 2012
After days of teetering on edge, there may be good news for cash-strapped and debt-laden Kingfisher Airlines. Prominent banks that have lent to the airline have decided to provide a relief package to it, sources say.
The lenders have been conferring since Friday over a viability report for the airline prepared by SBI Caps, the investment banking arm of SBI, as well as the future business plan of the struggling carrier.
Also on Wednesday, the Director General of Civil Aviation (DGCA) met with aviation minister Ajit Singh to apprise him of the latest situation following the meeting, Singh reiterated that the government would not interfere in any bailout packages by banks and that passenger safety continued to be its "prime concern".
SBI could bail out Kingfisher Airlines
NDTV, 22 Feb 2012
This is a significant change of stance from the largest state-owned bank after the bank's chairman had publicly stated that SBI would not provide any additional relief as Kingfisher Airlines was classified as a non-performing asset.

In what may come as good news to crisis-hit Kingfisher Airlines, prominent banks that have lent to the airline have reportedly decided to provide a relief package to it, sources said.
NDTV has learnt that the State Bank of India will provide Rs 1200 crore relief package to Kingfisher out of which nearly Rs 700 crore will be provided in working capital loans.
The package will include bank guarantee and loan repayment extension, sources said.
Punjab National Bank is also likely to provide a guarantee of Rs 160-200 crore.
However, SBI denied comment on the latest development. “Cannot comment due to client confidentiality,” SBI Chairman Pratip Chaudhuri told NDTV.
SBI currently has an exposure of Rs 1400 crore to Kingfisher and has classified it as a non-performing asset in the third quarter of this year. Till yesterday, a consortium of 18 banks that have lent to Kingfisher had refused to convert any more loans into equity.

RBI not opposed to banks lending to Kingfisher Airlines
DNA, 22 Feb 2012
The Reserve Bank of India (RBI) is "absolutely not" opposed to banks lending to debt-laden Kingfisher Airlines if they feel they can recover their money, deputy governor KC Chakrabarty told reporters on Wednesday.
Lenders to Kingfisher have yet to agree on extending further loans to the money-losing carrier, three banking sources said earlier after reports that one state-owned creditor had agreed on a bailout loan package.

India ‘to open up air sector in effort to save carrier’
The Times, 27 Feb 2012
Kingfisher Airlines is in talks with two carriers about a potential rescue package that could pave the way for IAG to take a minority stake.

Kingfisher in talks to rescue carrier: Mallya
Reuters, 27 Feb 2012
LONDON - Kingfisher Airlines is talking with two foreign carriers about a potential rescue package that could be announced within days, Kingfisher's chairman, Vijay Mallya, said in an interview with the Times newspaper on Monday.
Mallya, the billionaire who controls 58 percent of Kingfisher, said that he had secured provisional approval from the government for a change in the law that would ease restrictions on foreign ownership of Indian airlines.
He said the foreign airlines, which he did not name, were ready to invest in Kingfisher as soon as a change in the law was announced. The change would allow overseas airlines to own up to 49 percent of an Indian carrier for the first time.

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