KFA brands-trademarks auctions flop; banks may cut reserve price
Lenders failed to find any takers for brands and trademarks of the long defunct Kingfisher Airlines at an e-auction on Saturday with their efforts to recover a portion of over Rs 9,000 crore dues from beleaguered Vijay Mallya hitting yet another airpocket. The reserve price was kept at Rs 366.70 crore, not even a tenth the price at which the brand was pledged for an exorbitant Rs 4,000 crore in 2010. Sources said however that the reserve price was “too high” for any bidder to come in. Saturday’s attempts came within 45 days of the 17-bank consortium’s failure to sell Kingfisher House, the erstwhile headquarters of the airline, for Rs 150 crore. The fugitive Mallya, who was the chairman of the grounded airline and his group companies owe more than Rs 9,000 crore to the consortium led by SBI.
Banks so far have recovered only around Rs 1,240 crore and a similar amount has been encashed through selling pledged shares in group companies but the money is held up in various court cases. Lenders may now look at revising the reserve price for both Kingfisher House and brand Kingfisher and will soon start the valuation exercise, said bank sources.
The items on sale during Saturday’s e-auction included the Kingfisher logo as also the once-famous tagline ‘Fly the Good Times’. The other trademarks on sale included Flying Models, Funliner, Fly Kingfisher and Flying Bird Device.
“There were no bids, possibly because the reserve price was considered very high. Though the reserve price was set much lower than its original valuation at the time of taking the brand as collateral, people still found it to be high,” a banking source said.
“The reserve price has to be again looked into,” said another banker. Maybe the beer-maker United Breweries (a Mallya company) reported threat that the Kingfisher logo could only be bought/owned for aviation purposes could have played a role in the auction turning out to be damp squib.
In an official comment on the issue after the banks’ decision to auction the logo, United Breweries, the maker of Kingfisher and Kalyani Black Label beers, had warned that a buyer could use the logo only to set up another airline and for nothing else and anybody buying it for any other purposes would be legally challenged as it held exclusive rights to the brand. .
Saturday’s online auction began at 11:30 am and lasted for an hour without any success. It was conducted by SBI Cap Trustee Company on behalf of lenders under the Sarfaesi Act.
The Kingfisher brand itself was valued at over Rs 4,000 crore by Grant Thornton when the airline was at its peak. In its annual report for 2012-13, KFA said that at its peak, it was the largest airline in India, with a five-star rating from Skytrax.
The airline’s brand had been registered separately from the Kingfisher beer trademarks. A senior banker said, “The interest for this auction could have been from existing airline operators, but no one will come. It is better to start a new airline company than to buy this brand and revive it.”
According to brand experts, the fate of Saturday’s auction was known as the brand has taken a beating in past few years. “It was expected because the value of the Kingfisher brand is near zero,” N Chandramouli, chief executive of TRA, a brand intelligence and data insights company, said. In a previous attempt at recovery of dues, which have ballooned to over Rs 9,000 crore after taking into account the interest component, the banks had conducted an auction of Kingfisher House last month, but did not find any takers at a reserve price of Rs 150 crore. The Kingfisher House property has a built-up area of over 17,000 square feet in posh Vile Parle near domestic airport here.
Mallya, who left India on March 2 and is currently in London, has a non-bailable warrant against him in a money-laundering investigation. His passport has also been revoked. Earlier this week, the government said it has written to the British government seeking Mallya’s deportation.
In an interview to the Financial Times, Mallya said however that he was in a “forced exile” and had no plans at the moment to return to India where things are flying at him “fast and furious”. “I definitely would like to return to India. Right now, things are flying at me fast and furious. My passport has been revoked. I don’t know what the government is going to do next,” he said. Mallya said that he wanted a “reasonable” settlement with creditor banks for his defunct airline, but they “are not getting any money” by taking his passport or arresting him.