Jet Airways strongly claimed on Friday that its loan account with State Bank of India is standard after the SBI chairman said that it is under a watchlist. Jet share prices fell steeply on Friday after the company deferred its board meeting to consider first quarter results late Thursday night and the board’s audit committee chairman retired.
Jet clarified on Friday that the chairman Srinivasan Vishvanathan had retired after his term ended, and said that the management needed more time to finalise the accounts.
A Jet Airways spokesperson said that the loan account with SBI is standard. “We are regular in all our payment obligations to all our banks and statutory dues including PF obligations. Our account with all the banks as on date is “Standard”. Your information of Jet Airways being placed in the SMA1 and SMA2 category is incorrect,” the statement added. “We have had scheduled amortizations in the past so many years and the company has met its repayment obligations all the time. This is evidenced by the reduction in the overall debt of the company by ₹3,000 crore in the last three years.
“As mentioned in our communications, we have continuously been working on various cost and revenue initiatives to mitigate the significant increase in fuel rates and depreciation in the rupee, as there has not been any corresponding increase in fares in order to position Jet Airways as a stronger player in the growing aviation market.”
The confusion arose after SBI officials, including chairman Rajnish Kumar, said in an earnings call on Friday that the Jet accounts are a part of the stressed accounts watchlist. “Yes (we have exposure to Jet), but you are asking me to cross the ‘Lakshman Rekha’ (boundary) to talk about individual accounts. But since you have asked, I am telling, it’s part of the watchlist, SMA 1 and 2 in the June quarter,” Kumar said.
“It is a part of the watchlist, SMA 1, SMA 2 where it is I am not going to tell you. The chart which has been given (in the analyst presentation) … it includes watchlist, stressed SMA1 and SMA2. So it could be sitting under any of those,” Kumar added.
A company gets into the SMA1 list when its loans are overdue for 31-60 days and on the SMA2 list when the loans are overdue for 61-90 days. The loans are considered non-performing if payment is delayed beyond 90 days with the Reserve Bank of India rules now stipulating that loans overdue beyond 180 days would have to be compulsorily referred to the bankruptcy courts. SBI chief financial officer Anshula Kant seconded Kumar but did not give any additional details.
People close to the development told ET that Jet’s loans are part of the SMA1 list at SBI so it is still standard with the bank. It gets closer to default category only when it gets into SMA2, that is the loans are overdue for 60 days or more.
Jet Airways shares plunged to a three-year low and ended lower for the sixth consecutive day on Friday at ₹276.40, down 8.4%. The stock is the least favoured among airline stocks having fallen 66.75% so far in 2018. SpiceJet has declined 37.82% and Indigo airline’s parent has fallen 11% during the same period.
Can’t specify Q1 result day: Jet Airways
Source: Economic Times