Sahara, Kingfisher Recovery Plan: All That Glitters Is Not Gold

What is common in the recovery action spelt out early this week in two controversial cases of economic offence related to Sahara Group and Vijay Mallya’s Kingfisher Airlines? It is not the sell out of assets but the uncertainty over the desired outcome.

While in the case of recovery of investor’s money, the Supreme Court has asked the Securities and Exchange Board of India (Sebi) to sell off the real estate assets of Sahara Group in India, a consortium of lenders have decided to sell off the Kingfisher trademark towards the recovery of a Rs 9,000 crore worth loan of grounded aviation company Kingfisher Airlines in the other.

But, as a matter of fact, both these recovery actions are unlikely to fetch the desired outcome as the sales of these assets are neither easy nor adequately compensating.

The Supreme Court had on Tuesday asked Sebi, the main petitioner in the case of unauthorized collection of deposits from a large number of investors by two companies belonged to Subrata Roy Sahara-led Sahara Group, to recover the money by selling the Lucknow-based group’s selected real estate assets.

The list of assets referred in the recovery process has excluded the group’s once-prestigious Aambi Valley housing project in Maharashtra and its Sahara Star Hotel in Mumbai. The list of real estate assets previously identified by Sahara group for sales also excludes its various overseas assets including hotels and resorts in the US and UK. As per the estimate of Sahara group the 90 plots that it has identified for sale across the country would worth Rs 40,000 crore.

But, the critical issues that Sebi would face in selling these assets apart from its lack of expertise in the real estate sell out deals, are the absence clear title of these land properties as well as attracting buyers for such plots at the desired valuation, according to legal experts.

Sebi may get help from State Bank of India and HDFC in the land deal process, as its lawyers said, but, the valuation for plots, which doesn’t have clear titles and or with uncompleted transfer documents, may be difficult in today’s market situation.

Similarly, the lenders to Vijay Mallya and his grounded airline Kingfisher Airlines have put the company’s brands and trademarks including the common trademark of United Brewery’s beer brand and the airline—the Kingfisher on block to recover maximum money towards their dues.

But, the market value of these brands and logos attached to a troubled airline and a beleaguered promoter, which is already taken a beat on the perception point, is unlikely to fetch even the announced base price of Rs 367 crore. Besides, the trademark of Kingfisher, which was originally registered on United Breweries, will again get entangled in the ownership issue with the Heineken led United Breweries.