It might not be an easy task for the crisis-ridden Spicejet to secure the much needed Rs 600 crore immediate funding from banks despite the government requesting lenders to do so with bankers expressing caution to lend money to the Kalanithi Maran-promoted company, which is fighting a crisis now.
Banks are concerned over taking exposure on account of the current uncertainty in SpiceJet’s operations.
State Bank of India (SBI), th ecountry’s largest lender, will not lend to beleaguered airline, SBI’s chairman Arundhati Bhttacharya told Firstbiz, replying to a query.
Also, SBI doesn’t have any outstanding exposure to the Chennai-based company, Bhattacharya added.
However, the chairman of another state-run bank, who didn’t want to be named, said SpiceJet may get bankers’ assistance if the company is able to produce sufficient collateral against the loan.
“There are systems and processes in place while considering a loan proposal. They (SpiceJet) will have to produce necessary securities for a loan,” the banker said.
As on September, SpiceJet has total borrowings of Rs 1,506 crore that include long-term borrowings of Rs 1,183 crore and short-term borrowings of Rs 323 crore. It has loans from a clutch of private banks and a few state-run lenders.
The company is in urgent need of Rs 600 crore fresh loan to stay afloat. The company has total liabilities of around Rs 2,000 crore, which include dues to state-run oil companies and Airport Authority of India (AAI), SpiceJet’s balance sheet appears worryingly weak at this stage.
On Tuesday, the government provided a breather to the airline by asking the AAI and oil companies to give a fortnight more to the airline to pay back its dues, besides pushing the aviation regulator to relax the curbs on advance bookings beyond a month, until March.
This is expected to provide some relief, at least for now, to the airline to manage the crisis. On Wednesday, SpiceJet flights were not operating after oil companies refused to provide fuel to the carrier in the absence of outstanding payment dues.
Until now, banks have not raised alarm on the fate of their exposure, hoping that SpiceJet will manage a recovery.
In the recent years, banks have been risk-averse to lend to the aviation sector on account of its high-risk nature, especially after the Kingfisher loan default.
The grounded airline owes about Rs 6,000 crore to banks, which is a non-performing asset (NPA) on the books of banks. Following the default, banks had tagged Vijay Mallya, the promoter of Kingfisher, as a wilful defaulter after finding irregularities in the endues of money.
