UB auditors pick holes over loans of Kingfisher Air
Auditors of UB group’s holding firm, UBHL, have raised concerns over its significant exposure to debt-ridden Kingfisher Airlines, as also on delays and defaults related to tax dues and repayments to lenders.business Updated: Sep 19, 2012 20:39 IST
Auditors of UB group’s holding firm, UBHL, have raised concerns over its significant exposure to debt-ridden Kingfisher Airlines, as also on delays and defaults related to tax dues and repayments to lenders.
UBHL (United Breweries Holdings Ltd) is the holding firm for Vijay Mallya-led UB group, whose companies include United Breweries Ltd (UBL), United Spirits Ltd, McDowell Holdings, Mangalore Chemicals and Fertilisers and UB Engineering, besides Kingfisher Airlines (KFA).
The observations have been made by the auditors in UBHL’s annual report for 2011-12 that is being circulated among the shareholders ahead of the annual general meeting (AGM) on September 27 in Bangalore.
As per the auditor’s report, UBHL has a “significant financial exposure to KFA in the form of investments in equity, loans and advances and guarantees.
“KFA has considerably scaled down its operations and it is under severe financial stress. No provision has been made in the accounts for the probable loss that may arise due to non-recovery of loans and advances and other receivables, decline in the value of investments and invocation of guarantees.”
UBHL, on its part, has said that the company along with its subsidiaries has significant financial exposure on various counts to KFA, which has ceased to be a subsidiary from February, 18, and is now an associate company. This exposure as on March 31, 2012 included equity investment of Rs 2,114.3 crore, loans and advances Rs 1,048.7 crore and other receivables Rs 209.1 crore, and corporate guarantees to banks/aircraft lessors Rs 8,925.9 crore.
“Certain corporate guarantees have been invoked and KFA is under negotiation in this regard with beneficiaries. The management is reasonably confident that none of the guarantees would eventually devolve upon the company,” UBHL said.
First Published: Sep 19, 2012 20:37 IST