Delay in salary is ‘personal sorrow’, will pay you: Mallya
Chairman of Kingfisher Airlines and liquor baron Vijay Mallya has admitted in an internal communication that delay in payments of salaries is a “source of great personal sorrow”. He claimed that he has been working tirelessly to “negotiate” and that his efforts will be successful this week.
There are indeed a few reasons to be upbeat about his promise. He cited ‘light at the end of a long dark tunnel’ pointing to the government notification that allows direct import of aviation fuel, a move that would help Kingfisher’s current fuel costs to come down by 15%. The government is now planning to allow 49% investment by foreign airlines in domestic carriers. If materialized, Kingfisher can manage to find a foreign investor to pump money enabling a private rescue, but that is bound by the investor’s risk appetite. Mallya also revealed that the airline’s chief promoter, the UB Group has bought some of its loans in exchange for 5% stake.
This announcement comes against the backdrop of the Income Tax department’s decision to harden its stance of disallowing KFA to operate its bank accounts. It has even filed a caveat in Bombay High court to prevent any order being passed without hearing it first. The reason for this was reported as the airline deducting tax from the employees’ payroll last fiscal but failed to pass it on to the department. Kingfisher is alleging that that the reactive action taken by the IT department to freeze its bank accounts lead to the current crisis causing KFA to downsize the operating fleet by 50%. The crisis has also caused the the stocks of 16 banks lead by SBI, which fund KFA to go down by 4%.
Mallya also called upon employees to “stay committed to our common cause” and that he would reward those who have stayed with the company through its ups and downs, calling it the “true test of loyalty dedication and commitment”. Interestingly, in his sign-off to his employees, Mallya’s first designation is ‘Member of Parliament’ followed by that of ‘Chairman and Managing Director’ of Kingfisher Airlines.
It would be appropriate to note that his promise of paying his employees, clear tax backlogs, airport dues and fuel payments comes amidst consistent denial from banks, private players and the government to bailout Kingfisher. Will “The King of Good Times” deliver on his promise? Maybe we have to read his signature once more.
About the author : Arun is an Analytics professional who deeply follows business and politics, an Ivy League aspirant with interest in ‘Behavioral Economics’ and a travel enthusiast. He is the resident Business writer for News@indiandragon. You can catch up with him @gctarun
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