‘Wilful defaulter’ Vijay Mallya turns 60
MUMBAI: India’s self-styled “King of Good Times” Vijay Mallya turns 60 today, with the flamboyant tycoon showing no sign of slowing down — despite there being little to celebrate about his shattered business empire.
Mallya is planning a three-day bash — including performances by singer Enrique Iglesias — at his villa in the popular tourist state of Goa, to mark the occasion, according to newspaper reports.
“My birthday is a personal milestone,” the former billionaire, known for his lavish party lifestyle, told AFP in a brief text message in which he asked for his privacy to be respected “on this occasion”.
The liquor baron, who at his height was referred to as “India’s Richard Branson”, was not always so reticent, frequently flaunting his own achievements as his wealth soared in the early 2000s.
Mallya inherited United Breweries Group (UBG) from his father at the age of 28 and turned it into one of the world’s largest spirit makers, hosting extravagant yacht parties with Bollywood stars and politicians along the way.
But three decades later an indebted Mallya is deep in a financial fight following the travails of his Kingfisher Airlines, which owes over $1 billion to a consortium of state-run banks and creditors.
“You never knew when the party started and the work began or when the work stopped and the party started,” his friend and fellow entrepreneur G.R. Gopinath told AFP.
“He lived life to the full but he had idiosyncrasies and weaknesses like all of us, and he failed to see some of them, which proved fatal,” added Gopinath, who founded India’s first low-cost carrier Air Deccan.
As Mallya’s main liquor business flourished during the early noughties he diversified into other areas, including chemicals and fertilisers, and in 2005 launched Kingfisher Airlines, named after his company’s best-known beer.
His profile rose further when he acquired a stake in the Force India F1 team and ownership of the Royal Challengers Bangalore cricket team. His fortune reached a peak of $1.6 billion in 2007, according to Forbes magazine.
But he was unable to stop Kingfisher from haemorrhaging cash, and following a pilots’ strike over unpaid wages the airline was grounded in 2012 having never made a profit, leaving thousands of employees without jobs.
“Vijay Mallya overstretched his brash
attitude too much and leveraged his business too high without competent governance at key levels in his firms,” corporate governance expert Shriram Subramanian told AFP.
Mallya’s fortunes nosedived as the Indian economy began to slow sharply at the turn of the decade, with the aviation industry becoming one of the worsthit sectors.
As his empire struggled under the weight of Kingfisher’s losses Mallya sold a large chunk of United Spirits Ltd, a key part of UBG and a crucial source of his riches, to British drinks giant Diageo Plc.
“He’s a classic case of a megalomaniac whose thoughts and decisions were not challenged, finally leading him to lose control of crown jewels like United Breweries,” added Subramanian, managing director of Bangalore-based InGovern, an advisory firm.
Gopinath is kinder, describing Mallya as a “great marketeer” who was suited to the liquor industry, “which lends itself to the kind of adventures he embarked upon”.
“The airline industry required a different kind of focus, including cost control. If he had had the airline and nothing else then probably he would have succeeded but he had too many fish to fry,” said Gopinath.
Mallya remains boss of the Sahara Force India Formula 1 team, is still involved in cricket and is hanging on as chairman of UBG, despite management control being ceded to Diageo.
But he is no longer part of India’s elite group of billionaires, with Forbes pegging his fortune at $750 million last year, less than half the worth of his fortune at its peak.
He has also been declared a “wilful defaulter” — someone who is able but unwilling to pay — by creditors losing patience with Kingfisher’s failure to pay up, meaning acquiring fresh loans is near impossible.
He’s fighting to keep a number of luxury properties from creditors while a private jet is set to go up for auction, in a further sign of how his stock has fallen in recent years.
Gopinath believes one of Mallya’s greatest mistakes was surrounding himself with sycophants and courtiers who sugarcoated problems.
“It was a classic story of the emperor’s new clothes. He (Mallya) got cut off from reality and was not seeing what was so obvious to others,” he said.
“Many times he avoided those who told the truth because he didn’t want to hear them. He must realise that now.”