Maharaja’s coffers go empty and the banks aren’t lending

New Delhi: State-owned behemoth National Aviation Company of India Limited (Nacil) is facing rough weather with many banks refusing to lend short-term funds to the company. Its working capital need this financial year, which is already 42 per cent higher than last year, is likely to surpass the company board’s sanctioned limit of a whopping Rs 13,550 crore.
According to civil aviation ministry sources, Nacil is being forced into “distress borrowing” now since most banks are willing to roll over the company’s short-term loans. The exposure of banks has breached the limits set for a single company. “Instead, they (banks) have now demanded a comfort letter from the government,” said an official who did not want to be quoted.
In a recent presentation to civil aviation secretary M Madhavan Nambiar — a copy of which is with The Indian Express — Nacil said it is imperative that the Government bail it out with a Rs 2,750-crore soft loan and a Rs 1,231-crore equity infusion soon. “This will strengthen the balance sheet and infuse confidence among institutional lenders to support the aircraft acquisition programme,” it said.
When contacted, a Nacil spokesperson said, “The board has revised the working capital limits if the equity infusion does not take place. So far, we haven’t had any problems in raising working cap from banks nor in the rollover of loans.”
A ministry official said, “We are examining the proposal. A decision on the matter will be taken soon. We are committed towards a turnaround of the airline.” As the airline’s losses mount, vendors have put credit on hold.
09/03/09 Smita Aggarwal/Indian Express

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Categories: NACIL Mar 2009