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Want a grounded luxury jet? Tycoon's plane on garage sale

[NEW DELHI] Besides its plush interiors, a bar, shower cabin and a private resting area, the luxury jet comes with an added appeal: The vanity plate of former billionaire Vijay Mallya. Still, the impounded aircraft, now up for sale by Indian authorities seeking to recover unpaid dues, hasn't found too many takers.

India's government on Wednesday decided to postpone a scheduled auction of the jet by more than a month after receiving interest from only one party before the deadline for pre-bids ended this week. It is seeking to dispose of the jet, which was grounded more than three years ago following the collapse of Kingfisher Airlines.

The planned sale of the aircraft bearing the registration VT-VJM, Mallya's initials, is the latest attempt by Prime Minister Narendra Modi's administration in its battle against defaulters as the nation's banks struggle to rein in distressed assets.

Mallya has become the public face of this standoff after he left for the UK early this year, prompting the government to call him a fugitive whose carrier owes as much as US$1.4 billion.

"This shows the challenge for the government in recovering bad loans," said Hatim Broachwala, a Mumbai-based banking analyst at Nirmal Bang Institutional Equities.

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Sumanto Bhattacharya, a spokesman to Mallya and his UB Group, declined to comment. D.S. Malik, the New Delhi-based spokesman for the finance ministry, didn't answer two calls to his mobile phone.

Three or four more parties may be interested and they need to get a chance to inspect the plane, and delaying the auction may allow them more time, people with direct knowledge of the matter said, asking not to be identified as the information is private. 

The service tax department, which seized the Airbus Group SE A319 aircraft, will now hold the auction on June 29 and 30, MSTC, the state-run agent for the auction said on its website on Wednesday. The sale was originally scheduled for Thursday and Friday this week.

The Dutch government was the only party to register for the auction, ET Now television channel reported Tuesday, without saying where it obtained the information.

EXOTIC AND LUXURIOUS

"The only thing we can say is that we are currently looking at replacing the Dutch government plane," said Marianne Wuite, a The Hague-based spokeswoman for the Ministry of Infrastructure, without confirming or denying the interest in the luxury jet. "We will inform parliament as soon as we have taken a decision on that."

In an advertisement about two months ago, the government said the jet was "designed for exotic and luxurious use" and has "attractive exterior and interior layout and design."

The list price of an Airbus ACJ319 is US$87 million, including a VIP cabin, according to David Velupillai, a marketing director for Airbus. Negotiations are common in plane purchases.

COURT RULES

The plane's registered owner is CJ Leasing (Cayman) and was sub-leased to Kingfisher Airlines, according to documents provided in the auction tender. The carrier, which was based in Bengaluru, ceased operations in October 2012 after five straight years of losses and mounting debt.

CJ Leasing and Mumbai International Airport had objected to the auction of eight aircraft operated by Kingfisher, including the luxury jet, but an Indian court ruled in favo ur of the Commissioner of Service Tax, allowing the sale to proceed.

Lenders, fighting in courts to get their money back from Kingfisher Airlines, failed to find buyers for the carrier's brand and trademarks when they attempted to auction off the possessed assets, the Indian Express newspaper reported May 1.

Mallya, 60, ranked the 45th-richest Indian with a net worth of US$1 billion by Forbes in March 2012, has always maintained that Kingfisher was an "unfortunate commercial failure" caused by macroeconomic factors and government policies.

In his flamboyant heyday, the super-yacht-owning tycoon often drew comparisons with Virgin Group Plc's Richard Branson.

After revoking his diplomatic passport and calling him a "fugitive," the Indian government sought his deportation from the UK and is seeking legal advice on his extradition.

Mallya has said he didn't flee the country and he is neither an "absconder" nor a "wilful defaulter."

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