The e-auction of Kingfisher House in Mumbai, slated for Thursday, could turn out to be a flop since no buyer had approached SBICAP Trustee till late Wednesday evening, sources told FE. They said the trustee company had not received the earnest money deposit (EMD) payable to enable participation in the auction. The reserve price for the property is Rs 150 crore.
The last date for submission of bid application documents, EMD amount of Rs 15 crore and KYC documents was Monday, 5 pm. However, sources said, the bidders found the reserve price too high. “Buyers are saying that last year, the property was estimated to be Rs 100 crore, so Rs 150 crore is a much higher price,” a source said.
SBICAP Trustee Company, a wholly-owned subsidiary of SBI Capital Markets (SBI Cap), in a public notice last month announced e-auction of the property, situated near the Chhatrapati Shivaji International Airport.
The auction is part of the recovery process of dues from the airline’s promoter Vijay Mallya, under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi), 2002.
The public notice said that Mallya owed banks over Rs 6,963 crore. The land along with the building measures around 3,988 square metres, according to the public notice.
Lenders to Kingfisher have not been able to recover their loans and their efforts have met with multiple hurdles. One of the assets that banks have been trying to auction Kingfisher House in Mumbai and also trying to take possession of Kingfisher Villa in Goa.
Kingfisher House is among the assets pledged by the company to a consortium of 17 banks. In 2013, the I-T department had moved a Bengaluru court asking lenders to first settle the dues of the department amounting to Rs 350 crore as the property was attached under the I-T Act. The IT department had said that Kingfisher Airlines Limited (KAL) had deducted tax at source from employee’s salary and other payments but did not to remit it to the government account.
The villa in Goa is also in dispute as United Spirits (USL) has claimed it was a tenant there since 2005 and therefore banks cannot sell it without its approval. Kingfisher Airlines, which has not flown since October 2012, owes close to Rs 7,000 crore to bankers who have been trying to recover their money by selling securities pledged by the
firm. These include real estate and shares in multiple group entities. Banks had also sold around four lakh shares of USL pledged with them for Rs 104 crore in 2014.