Reliance Industries has rubbished reports suggesting that it is holding discussions to purchase a stake in Kingfisher airlines, which is facing a severe debt burden and shortage of funds.

According to a report in the Business Line newspaper, Reliance is considering a financial investment or might buy a stake through a preferential offer by the cash-strapped airlines. The report said that Reliance has approached a merchant banker to carry out due diligence of the carrier.

Ravi Nedungadi, chief financial officer of UB Group, which owns the airlines ahs said that it has been approached by some strategic investors. It is also believed that Vijay Mallya is holding discussions with a strategic investor for an investment into the airline.

Meanwhile, the board of Kingfisher airlines is scheduled to meet today before the company's second quarter results are announced and is expected to discuss ways to reduce the whooping Rs. 7,000 crore debt on the company.

The airline might consider selling assets and converting loans into equity to raise funds. It might also look at a preferential issue and the promoter, UB Group may seek to convert Rs. 675 crore debt into equity.

Kingfisher, India's second biggest airlines, is believed to be unable to raise money from the capital or debt market and it is becoming increasing difficult for the company to pay for fuel for its flights. Company staff has been dwindling as employees had lost faith in the airlines future. The airline had delayed making salary payments for August and September upsetting many employees and making them think about leaving their jobs.