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Kingfisher Airlines, Grant Thornton India Under SFIO Probe Over 'Inflated Valuation'

(Credit: S Kumar/Mint via Getty Images) MUMBAI, INIDA NOVEMBER 15: Vijay Mallya, Chairman of Kingfisher Airlines at press conference to announce the results at Regency Ballroom, Hyatt Regency, Andheri (E) on November 15, 2011 in Mumbai, India. Profile Of Chairman UB Group And Kingfisher Airlines Vijay Mallya
March 16
11:41 PM 2016

Vijay Mallya's Kingfisher Airlines is being investigated by the Serious Fraud Investigation Office (SFIO) regarding its allegedly brand valuation that reached over Rs 4,000 crore.  Grant Thornton India also came under SFIO's scanner as it associates the crore valuations to the said airline brand in 2011 making the name brand the sole giant collateral for its loans.

Kingfisher Airlines stopped its operation in 2012 due to liabilities to the lenders and big losses. While the lenders made efforts to regain dues with a total of over Rs 9,000 crore, Mallya, who is the founder and major promoter, has left the country earlier of March. SFIO is already investigating Kingfisher for "financial irregularities and fund diversion" and examines the participation of Grant Thornton which valued the brand who is willing to provide all the necessary information needed in connection with the matter, according to the MSN report.  

"Grant Thornton assigned a value of Rs. 4,100 crore to Kingfisher Airlines, although lenders arrived at Rs.160 crore valuation when they carried out their own internal exercise. There cannot be such a huge difference. Kingfisher Airlines was not profitable and the airline industry was not in good shape when Grant Thornton assigned this excessive valuation," said one of the two persons mentioned above, an official familiar with the investigations as quoted from a livemint report.

SFIO also raised concern about the huge valuation on a beer brand used for an airline.  An SFIO senior official states that Kingfisher is a good beer brand, however, not in airlines.

Grant Thornton valuation report emerged at the time the airline company does not have enough resources successfully operate and that a previous loan was about to become a non-performing asset (NPA), the Daily News and Analysis reports.

As of the moment, SFIO is carefully examining loads of documents from United Breweries.  They also want to query Vijay Mallya once again to complete the case against Kingfisher.

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