Kingfisher House: High reserve price keeps potential buyers away

Written by Shubhra Tandon , Shayan Ghosh | New Delhi | Published:March 17, 2016 12:46 am
The promoter of the defunct Kingfisher Airlines is believed to be in UK. (Archive) Vijay Mallya (Archive)

The e-auction of Kingfisher House, Kingfisher Airline’s corporate office in Mumbai, to be held on Thursday by SBICAP Trustee Company, is likely to be a damp squib as no buyer is understood to have approached SBICAP.

Sources with knowledge of the development said that SBICAP Trustee has not received the earnest money deposit (EMD) from any interested buyer as of Wednesday. The last date for submission of bid application documents, EMD amount and KYC documents was set as Monday, 5 pm. The bidders were required to submit 10 per cent of the reserve price or Rs 15 crore as the EMD amount. The reserve price for the property was Rs 150 crore.

However, sources said the bidders found the reserve price too high, as a result of which no one has come forward to participate in the auction. “Buyers are saying that last year the property was estimated to be Rs 100 crore, so Rs 150 crore is a much higher price,” a source said.

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SBICAP Trustee Company, a wholly-owned subsidiary of SBI Capital Markets (SBI Cap), in a public notice last month announced e-auction of the property, situated near the Chhatrapati Shivaji International Airport. The auction is part of the recovery process of dues from the airline’s promoter Vijay Mallya, under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi), 2002. The public notice said that Mallya owed banks over Rs 6,963 crore. The land along with the building measures around 3,988 square metres, according to the public notice.

Lenders to Kingfisher have not been able to recover their loans and their efforts have met with multiple hurdles. One of the assets that banks have been trying to auction Kingfisher House in Mumbai and also trying to take possession of Kingfisher Villa in Goa.

Kingfisher House is among the assets pledged by the company to a consortium of 17 banks. In 2013, the I-T department had moved a Bengaluru court asking lenders to first settle the dues of the department amounting to Rs 350 crore as the property was attached under the I-T Act. The IT department had said that Kingfisher Airlines Limited (KAL) had deducted tax at source from employee’s salary and other payments but did not to remit it to the government account.

The villa in Goa is also in dispute as United Spirits (USL) has claimed it was a tenant there since 2005 and therefore banks cannot sell it without its approval. Kingfisher Airlines, which has not flown since October 2012, owes close to Rs 7,000 crore to bankers who have been trying to recover their money by selling securities pledged by the firm. These include real estate and shares in multiple group entities. Banks had also sold around four lakh shares of USL pledged with them for Rs 104 crore in 2014. FE

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