Mumbai, Nov. 9: The Diageo-United Spirits deal has been finally struck but it isn't going to spark a funds infusion into beleaguered Kingfisher Airlines.
UB group chairman Vijay Mallya today said he would address the issues faced by Kingfisher Airlines separately and a solution to its problems should not be linked to the Diageo transaction.
Kingfisher Airlines has debts of over Rs 7,000 crore. It was widely expected that a part of the proceeds that the UB group got from the stake sale to Diageo would be used to trim Kingfisher's debts.
The State Bank of India, which is its largest lender, has reportedly asked the airline's promoters to bring at least $1 billion to revive the airline whose licence was suspended last month.
Mallya told reporters at a conference call that the UB group had multiple businesses and each company was an independent public entity.
"We have multiple businesses and each business operates independently of each other; there is no cross-contamination. We will also address the needs of Kingfisher Airlines, but we will address it separately for the good of the company and its shareholders," he said when asked whether the proceeds from the deal would be injected into the airline.
Mallya went on to add that he had not received any communication from bankers to the airline that it must bring in $1 billion by the end of this month. According to the UB group chief, a comprehensive rehabilitation plan is now being worked out at Kingfisher Airlines.
"It is unfortunate to link this transaction to the airline. I do what is best for each one of my businesses. Kingfisher Airlines' problems will be addressed fairly and squarely. I have done what is best for United Spirits and I will obviously do what is the best for Kingfisher Airlines. Let's not inter-relate anything," he said, saying that United Breweries (Holding) Ltd, its promoter, and the airline will chart out the best course for its growth.
Mallya's observation has now led to questions as to whether part of the proceeds will flow into the struggling airline. Incidentally, of the Rs 5,725-crore deal, around Rs 2,400-crore will go towards UB Holdings Ltd.
"Although his (Mallya's) statements bring down hopes of any money from the Diageo deal coming into the airline, one still cannot rule out the possibility of the holding company infusing some funds," an analyst said.
Bankers to the airline were, however, pleased to hear about the deal.
"This is positive news for us. We do think money flowing into the hands of the main holding company and the promoter is a positive for the airline," SBI managing director (mid-corporates) S. Vishwanathan said.