Mumbai, Dec 13 () : Shares for the 8th day rose after Kingfisher Airlines was reported to be in stake sale talks with Abu Dhabi’s Etihad Airways.
Today, it told Bombay Stock Exchange that it has limited foreign portfolio investment in the aviation company at 3 percent, giving foreign investor to buy up to 46 per cent.
FDI in aviation limits foreign investment to 49 per cent in Indian carriers. 2.46% of KF stock is held by overseas institutional investors, according to BSE stock exchange data. Foreign institutional investment cap was limited to keep the capital structure ready for infusion of capital into KF.
BSE shares after Thursday last rose for the eighth straight day after KF informed the Bombay Stock Exchange (BSE) of the various steps to improve the financial position of the company. Kingfisher Airlines’ steps are infusion of capital. The shares quoted at Rs 7.05 in August today stands at Rs 17.25 with a 5% increase every day. Buyers of shares are hopeful that KF would start working.
Today’s move comes to facilitate Etihad Airways and other foreign investors to invest in Kingfisher Airlines. Since May 2005, KF balance sheet has been in the red and has run up bank debt over Rs. 7,000 crore and stopped paying interest since January. A little over Rs. 1,000 crore has to be paid to vendors, salaries and tax arrears. Etihad airways is expected to pump in Rs 3400 cr in two installments.
DGCA had suspended its flying licence till KF comes up with a revival plan.
KF would move the RBI also to inform about the moves to revive the operations. Valued at $231 million (Rs. 1,200 crore), KF since October has not been flying and has extended the closure to Jan 15th. It has paid salaries till May. Outstandings to oil companies and airports are due. Non-payment of service tax led to a KF aircraft being seized.