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7/29/2019 FM Kingfisher
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Kingfisher Case study
Arun Anjana C-36
Safal Acharya C-37
Saurabh Tyagi C-38
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History
Founded in 2003
Commenced business in 2005
Fleet of 4 planes to 64 in 2011 Acquired stake in Deccan aviation in
April 2008
71 destinations 2nd largest airline till Dec 2011
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The Good Times
One of the only seven airlines awarded 5-starrating by SKYTRAX
Kingfisher will join the Oneworld Airline
Alliance on February 10th 2012
NDTV Profit Business Leadership Award for
Aviation
India's No. 1 Airline in customer satisfactionby Business World
In May 2009, Kingfisher Airlines carried more
than 1 million passengers
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The journey so far.
particulars 2011 2010 2009 2008 2007
Net worth -2,951.19 -3,898.45 -2,125.34 198.88 384.70
Total debt 7,057.08 7,922.60 5,665.56 934.38 916.71
Total assets 4,105.89 4,024.17 3,540.21 1,133.26 1,301.40
Total Income 6,314.96 4,314.62 5,868.07 1,569.90 2,142.31
Interest 2,340.32 2,245.59 2,029.33 434.44 466.05
PAT -1,027.40 -1,647.22 -1,608.83 -188.14 -416.58
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The Problem
Acquisition of Deccan airlines
Expanding business beyond capacity, finance
could not support Increased interest and debt
Increasing liabilities
Power and Fuel cost rose from 979.50 in 2007
to 2,274.03cr in 2011
High competition in the sector
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Troubled Times
Huge debt
Eroded market capitalization
Cash shortage Flights grounded
Accounts frozen
Declared NPA by lenders
Survival fears
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Banks exposure to debt
Other banks include- ICICI bank, Central bank of
India, United bank of India, UCO bank and
Corporation bank.
Bank Amount in crore Status
SBI 1,457.78 Termed NPA
IDBI 727.63 Termed NPA
PNB 710.33 Termed NPA
Bank of India 575.27 Termed NPA
Bank of Baroda 537.51 Termed NPA
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Steps taken
Stopped its low-cost carrier Kingfisher Red
Airlines imported fuel directly to avoid sales
tax levied by the states Headcount stood at 7,317 on 31st march
2011 down from an average of 7,681
Believed to cut 2,000 jobs by July would operate 40 planes out of its 64-strong
fleet
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Debt Restructuring
Rs750.10cr converted into cumulative
redeemable preference shares Rs553.10cr as non-convertible cumulative
redeemable preference shares to be
redeemed after 12 years Scheduled to repay loans to SBI from
September 2012
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Security given by Kingfisher
Personal Guarantee of 248.97cr by Mallya
Corporate Guarantee of 1,601.43cr by United
Breweries Holdings
Pooled collateral security of 5,238.59cr
includes Kingfisher House, Kingfisher Villa,
hypothecation of choppers and brand
Kingfisher
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The way out..
Reduce the number of Aircraft
Fly in Tier 2, tier 3 cities
Place the expansion plans on hold
Dynamic Pricing
Re-appeal to the government for the Second Debtrecast plan
Focus on Business Class passengers as theyaccount for 48% of passengers and approximately66% revenue for Indian Aviation Sector
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Institutional Investor
FDI up to 24% by Foreign players
Raise funds abroad
Indian Investor
Merger
Other Options.
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Thank You