Sunday, July 24, 2011


by Ravi Srivastava on Sunday, July 24, 2011 at 4:46pm
This is an open secret that majority of the Indian corporate do their business with Public Money , may it be in the form of Equity , Bank Loans and that’s the reason that in India “ Industry goes sick’ and not the Industrialist ,here is a classic case , where the Private Airline has blatantly misused the Public Money of Govt. owned oil Marketing companies (OMC’s) , IOC, BPC& HPC in the form of inordinately extended credit of large sums ranging Rs. 400-700 crores
Approx. 40% of any Airline’s operational cost consists of fuel purchases of ATF(Aviation Turbine Fuel)and 98% of the ATF is sold by OMC’s .Though NACIL(Air India) is a big buyer of ATF from IOC and credit sometimes exceeds to Rs. 900 -1000 crores but then there is a sovereign guarantee of Govt. of India. However M/S Kingfisher Airline(KFA) owned by famous Vijay Mallya were buying ATF from IOC and defaulted on payment IOC promptly stopped the ATF supplies and revoked the bank Guarantee of KFA in 2008 later a meeting was convened in MOP&NG attended by 2, ministers Murli Deora & Praful Patel apart from bureaucrats and they forced OMC’s to continue give ATF on credit and extend it equivalent up to 2 months credit.KFA switched over to BPC for fuel supplies and there also credit exceeded to Rs. 290 cr. , BPC approached Hon’ble Mumbai high court for recovery of their outstanding in late 2009 later BPC reached an “out of court” settlement where KFA agreed to clear their outstanding with interest by paying an installment Rs. 10 crore per month. It is reliably understood that in Nov. 2010 , BPC has again contemplated for revoking the settlement , since KFA has not settled entire dues dues with them.
After dispute with IOC/BPC, KFA resorted to entire ATF purchases from HPC who merrily started offering ATF on credit , KFA was buying approx. Rs 115 cr. of ATF every month and repeatedly defaulted on payment and outstanding accumulated Rs. 603crores in the month of March 2010. Suddenly MOP&NG who have the Govt. directors on OMC boards woke from the deep slumber (They are supposed to monitor OMC credit situation on fortnightly basis) and advised HPCL to stop supplies to KFA on 16th March .In fact HPCL did not even had a Bank Guarantee but only a corporate Guarantee from UB group , which has no legal sanctity.
On 30th march HPCL Board was advised to invoke the Corporate Guarantee to recover overdue payments , remove DGM aviation forthwith and give ATF to KFA against cash& carry only ,subsequently HPCL extended the period up to June 2010 and finally up to July 2010 to synchronize it with the retirement of then chairman HPCL Arun Balakrishnan, who retired on 31.7.2010. A CVC complaint for this unauthorized credit is already registered No. 1605/09/6 Dt 11.11.2009 and for which CVO HPCL has already submitted his report to CVC on 24.6.2010.No action against any erring officer has been taken till date, while present Chairman HPCL has admitted in AGM on 16.9.2010 that Rs. 240 crore are still overdue from KFA.
In turn extending this un authorized credit , HPCL Top Management has received host of favors from KFA in cash and kind, like multiple mileage points(Return ticket DEL-MUM purchased for Rs. 34000, which is ordinarily available for Rs. 10000), upgrade to business class, access to lounge , free tickets for Executive Directors and above of HPCL. A RTI to this effect has not been responded by HPCL.
The story continues in Nov. 2010 IDBI recalled their loan of Rs. 750 cr. KFA repeated the same old story of debt restructuring which they were doing since Aug. 2010, By March 2011HPCL the outstanding of HPCL touched Rs. 558 cr. This was exceeding by Rs. 300 cr. The credit limit fixed by HPCL , since HPCl was closing their annual accounts they asked KFA to clear the over due amount of RS. 258 Cr. KFA gave a cheque of Rs. 200 cr. Dt. 31.3.2011 only to get it bounced on 4.4.2011., by April KFA outstanding touched Rs. 602 cr. And finally Rs. 702.88 on 18.7.2011 , while HPCL threatened to stop fuelling KFA flights at Delhi and Mumbai , which 402.88 cr above its ‘so called’ cr. Limit of Rs. 300 cr( equivalent to 2 months current upliftment).As per HPCL’s own systems any supply above cr. Limit has to be authenticated by SBU Head which clearly shows a nexus of HPCL-KFA .
The Govt. raises fuel price every now then , but a blatant loot of public money is going on unabated which proves that the drama of Govt. “under recoveries ‘ is big farce and how a Private Airline is manipulating the Govt. Oil company in connivance with its officials
This is shocking that Industrialist like Vijay Mallya the King of Good Times and a Rajya Sabha MP can print semi nude calendars, buying cricket teams, Racing horses with our hard earned tax payers money.

R. P. Srivastava

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