More than a year after one of India’s top airlines, Kingfisher, stopped flying, its flamboyant owner Vijay Mallya is battling against losing control of his $2.2-billion or Rs. 13,640 crore ($1=Rs. 62) corporate empire.
Mr. Mallya, once the self-proclaimed “King of Good Times”, made his fortune in the liquor business and controls a conglomerate spanning beer, airlines, fertilisers and engineering.
But in several firms in his United Breweries Group, 58-year-old Mr. Mallya’s ownership has substantially shrunk, while in others, large portions of his holdings are pledged with banks — and in some cases are starting to be sold off.
“The legacy of the empire, which he inherited from his dad, is at risk,” said a Mumbai-based analyst from a group that has lent to Mr. Mallya’s companies, asking not to be named.
Mr. Mallya, owner of a Formula One team and host of lavish yacht parties with Bollywood stars and politicians as guests, was India’s 29th richest man in 2007, worth an estimated $1.5 billion or Rs. 9,300 crore, according to Forbes.
But pressure on Mr. Mallya has mounted over the past two years since Kingfisher Airlines’ fortunes went into a downward spiral, hit by high fuel prices, fierce competition and heavy interest costs.
The company, which has never made a profit since it began flying in 2005, owes vast sums to banks, airports, fuel suppliers and staff, while owners of Kingfisher’s grounded planes have taken them back.
Bitter legal battle
Last year, banks which say they lent more than $1.5 billion or Rs. 9,300 crore to Kingfisher started demanding immediate repayment after Mr. Mallya failed to come up with a convincing airline revival plan.
Mr. Mallya is now in a bitter legal battle with lenders to prevent them from selling properties and assets given as security against loans, which the banks say include his beloved personal villa in Goa.
As part of a money-raising strategy, Mr. Mallya in 2012 abandoned control of his United Spirits to British drinks group Diageo — although a court has since annulled the decision in response to a petition from Kingfisher creditors chasing their dues.
Meanwhile, Dutch brewer Heineken last year upped its holding in United Breweries, which makes Kingfisher beer, to near 39 per cent, overtaking Mr. Mallya’s stake.
