Monday, March 07, 2016

Did Kingfisher use Indian bank loans to pay F1 team's foreign loans?

New Delhi: The Kingfisher Airlines saga and how Vijay Mallya's now-defunct airline cost Indian banks Rs 7,000 crore seems to be getting murkier by the day.

It has now emerged that Kingfisher paid almost Rs 130 crore (at the current pound-rupee exchange rate) to Force India Formula One Team – jointly owned by Mallya and the now-incarcerated Sahara India Pariwar boss Subrata Roy.

This, even as Kingfisher was bleeding, piling up loans from Indian banks, leaving staff with unpaid salaries, sacking pilots and grounding aircraft, causing turmoil in the domestic aviation industry, leading to a spike in airfares.
That is not all. Documents suggest that after Roy bought half of Mallya's stake in the F1 team for $100 million, most of the loans of the F1 team to foreign banks were paid. But Indian banks are still struggling to recover even a fraction of the Rs 7,000 crore from Mallya. Roy is in jail after failing to pay thousands of small depositors (many of them fictitious) Rs 24,000 crore.
The series of payments from the embattled Kingfisher began a few months after Mallya bought a stake in the Spyker F1 team, along with Dutch businessman Michiel Mol, in 2007. By 2009, when Kingfisher's bank loans were mounting and its losses had touched Rs 1,600 crore, 6.4 million GBP was paid from the accounts of Kingfisher to the F1 team. The amount was labelled as 'sponsorship money' from Kingfisher.
07/03/16 Daily News & Analysis
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