Kingfisher no longer a UB arm but exposure stands at Rs 12k cr

New Delhi: Vijay Mallya-led UB group’s United Breweries (Holdings) Ltd today said Kingfisher Airlines has ceased to be its subsidiary, but it had a significant exposure of over Rs 12,000 crore to the air carrier.

Announcing its financial results for the fourth quarter ended 31 March 2012, which saw its net profit plunging sharply by over 83 percent to Rs 2.10 crore, UB Holdings said that Kingfisher ceased to be a subsidiary as on 18 February 2012, after the carrier allotted shares against optionally convertible debentures to certain entities.

Noting that it has given significant guarantees on behalf of its subsidiaries and associate companies, UB Holdings said that its exposure to Kingfisher Airlines totalled Rs 12,215.18 crore as on 31 March 2012.

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The company’s exposure relating to Kingfisher Airlines is under various accounts including corporate guarantees to banks.

“The company has significant exposure on various counts to Kingfisher Airlines as on 31 March 2012. These include investment in equity/preference capital at Rs 2,118.48 crore, corporate guarantees to banks/aircraft lessors at Rs 8,925.86 crore,” the filing said.

Total exposure include “advances at Rs 1,029.75 crore and other receivables Rs 141.09 crore”, it said.

“Certain corporate guarantees have been invoked and Kingfisher Airlines is under negotiation in this regard with the beneficiaries,” the filing added.

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As on 31 December 2011, UB Holdings’ stake in Kingfisher stood at 40.1 percent, but it declined to 34.55 percent on 18 February 2012 after an increase in the airline’s equity base pursuant to issue of shares to some entities in lieu of certain convertible bonds.

As per the latest shareholding pattern available with the BSE, UB Holdings’ stake in Kingfisher has declined further to 29.39 percent as on 24 April 2012. The entire holding of UB Holdings in Kingfisher is as such pledged, the BSE data shows.

UB Holdings further said that the development of a luxury residential building ‘Kingfisher Towers-Residences at UB City’ is under progress and it has entered into agreements to sell part of this project.

The agreements have been reached with prospective buyers for sale of six units of 8,321 square feet at the project, where UB Holdings’ share is 4,18,388 square feet.

UB Holdings further said that its investment in subsidiaries have been considered as long term strategic investments and diminution in their market value, though significant is considered temporary in nature.

The company said guarantee commission has been accrued based on contractual obligation, although the recovery could take a longer period of time than what was anticipated.

UB Holdings has been giving significant guarantees on behalf of subsidiaries and other associated companies and advances to subsidiaries. No amount has so far devolved on the company, the filing said.

PTI