Monday, September 5, 2011

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 used 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. 400-600 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 .KFA switched over to BPC for fuel supplies and there also credit exceeded to Rs. 290 cr. and 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 dues with them.
After dispute with IOC/BPC, KFA resorted to 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 .later HPCL extended the period up to June 2010 and finally up to July 2010 to synchronize it with the retirement of then chairman HPCL 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. A RTI to this effect has not been responded by HPCL.
This is shocking that Industrialist like Vijay Mallya print semi nude calendars, buying cricket teams, Racing horses with our hard earned tax payers money.