The move by banks to auction the brands and trademarks of Kingfisher Airlines (KFA) on Saturday failed to take off as bidders kept away from the exercise. Banks had fixed a reserve price of Rs 366.70 crore for the e-auction in their efforts to recover loans from Vijay Mallya owned defunct airline.
Banks had put the Kingfisher logo, ‘Fly the Good Times’ tagline, Flying Models, Funliner, Fly Kingfisher and Flying Bird Device for e-auction. Earlier, the bid by banks to auction Kingfisher House — the headquarters of the airline — also failed with no bidder coming forward.
The CBI had earlier raised concerns over the high valuation of the Kingfisher Airlines brand by its lenders and questioned them on why they used it as collateral while extending loans to the Mallya company.
In its 2012-13 annual report, Kingfisher Airlines had said that at its peak it was the largest airline in India, with a five-star rating from Skytrax. A brand valuation by consultancy firm, Grant Thornton put its value at $550 million (Rs 3,000 crore) on resumption of operations. The airline’s brand had been registered separately from the Kingfisher beer trademark.
The a-auction was conducted by SBICap Trustee Company on behalf of 17 banks. While there were nine trademarks on the block, it said the property will not be sold below the reserve price. “However, the bidder must undertake to increase the bid amount by bid increment /multiplier amount mentioned in the sale notice, even if the bidder is a sole/successful bidder,” SBICap Trustee said in the notice.
According to sources, the reserve price of Rs 366.70 crore for Kingfisher brands is very high. “Who wants to buy the trademarks of a company mired in legal and banking issues. The price is too high. It makes more sense to create a new brand than buying a brand name at a high price,” said a source.
In the public notice, SBICap Trustee Company said Kingfisher Airlines has overdues of Rs 6,963 crore.
The airlines brand name was pledged to 14 lenders, including State Bank of India (SBI), IDBI Bank, Punjab National Bank, Bank of India and Bank of Baroda under a debt recast agreement in which loans valuing Rs 6,500 crore were restructured and converted into equity. Bankers it is not common for banks to accept brands as collateral.