How the mighty are fallen: Vijay Mallya and the crumbling of an empire
If there’s one deal that’s truly symbolic of a larger picture, it’s this one: Vijay Mallya’s private jet has been sold off for a mere Rs.22 lakhs. The plane was put up for sale in part repayment of the debts owed by Mallya’s Kingfisher Airlines to Mumbai International Airport, and the Kurla based company buying the aircraft is going to break it down and sell it as scrap. This is such an apt analogy for the way in which the empire Mallya inherited and seemed to expand so successfully now lies in smithereens.
Mallya, chairman of the vast United Breweries conglomerate, called himself the “king of good times”, and is probably the most flamboyant Indian industrialist ever. Taking over from his father Vittal Mallya at the age of only 28, the son seemed to have everything going for him: wealth, business savvy and a much-photographed propensity for high living that was to become a source of endless fascination in a country hungry for glamour and stories of high-flying success. In those early years post the license raj, Mallya consolidated the dominance of UB and made Kingfisher beer a household name.
But what made Mallya symbolic of an entire nation’s wannabe aspirations in an economy opening up to a globalizing world was not his helming of UB as much as his other activities, most of which appeared to come from a deep need for self-promotion and for living in the public eye. Between 2005 and 2010, Mallya notched up a list of high profile new ventures: he launched Kingfisher Airlines, became joint owner of an F1 sports racing team that was rechristened Force India, and led other industry magnates and celebrities into the IPL rush by signing on to establish the Royal Challengers Bangalore team.
For some years, it looked like nothing could go wrong for Mallya. Kingfisher became the fun airline to fly, providing individual multi-channel TV screens on domestic flights, airhostesses with derriere-hugging red miniskirts handpicked by Mallya himself and celebrities hopping on and off flights to choose lucky daily prize-winning passengers. In May 2009, Kingfisher carried over a million passengers, making it the carrier with the highest domestic market share and encouraging Mallya to expand the fleet and inaugurate international routes.
The famous Kingfisher Calender, nubile beauties sprawled in itsy-bitsy bikinis across its pages, became the byword for Indian glamour photography. The Royal Challengers was the team with the fanciest profile, Deepika Padukone regularly appearing to wave at fans from the owner’s box with Mallya and his son Siddharth. Mallya senior also became a Rajya Sabha member, though this probably didn’t add as much to his glamour as to his political clout.
Stories and a regular flow of pictures did the rounds, with journalists quick to feed a growing Indian hunger for the vicarious good life: of the maverick tycoon’s fabulous parties, the $200 caviar pizza he served guests, his designer decorated Goa villa and dozen-odd other fancy homes, his flashy sports cars, his $95m yacht, his private jet, his calendar girls, even the handsome son who lent the father’s hedonism that precious aura of youth. In his home city, Bangalore, the spanking new super high end UB City Mall housed luxury international brands like Louis Vuitton, Rolex, Burberry and Estee Lauder. “India has never had a leader, especially in business, who has been unapologetic about his wealth and enjoying his wealth,” wrote Saritha Rai in the Indian Express. “New younger Indians see wealth as a gauge of status. They are more westernised and more materialistic.”
But the good times that looked like they would never end began grinding to a halt. The RCB team didn’t make good on its promise, and in 2008 there was a much publicized falling out with the popular and highly respected Rahul Dravid. Following this, the management was overhauled, though not with much eventual success. Kingfisher Airlines had taken over Air Deccan in late 2007, and this turned out to be a disastrous move. The cracks were beginning to show at various seams.
The airline couldn’t sustain the luxury facilities it had begun by promising and news of its debts began surfacing, culminating, in 2011, with an announcement that it could no longer pay employee salaries. Rocked by rising taxes, fuel costs and airport charges, the airline, which had never actually made a profit, was now revealed to be in deep debt. Finally, in October 2012, even its license was taken away.
Meanwhile, price discounts failed to sell more than a third of F1 tickets, and Mallya and his partner Michiel Mol were forced to sell off just short of half their share in Force India to Sahara’s Subroto Roy, who renamed the team Sahara Force India. Still, the widespread popular fascination with Mallya and the willingness of the world of finance to underwrite his shenanigans seemed almost limitless. The Guardian commented: “The considerable leeway offered to Mallya, particularly by public banks that may now lose very large amounts of taxpayers’ money, may also simply have been due to an almost irrational collective desire to see Mallya succeed, at all costs. Mallya’s victories were, and still are, to a certain degree, those of his country.”
In 2012, Mallya was taken off the Forbes list of Indian billionaires because his net worth was then estimated at a mere $800 million. He still has UB, people might say. But has Mallya’s style worked on the mother ship? In April 2014, Indian bankers said they wanted Mallya to step down from his post on the board at UB. The SBI-led consortium was owed well over three billion rupees at the time. In 2013, UB’s net profit margin was -0.97% with a return on average equity of -2.14%, while the operating margin was 0.67% compared with roughly 14% in 2007. It is rumoured that Mallya may now have to put up the 100-crore Kingfisher House in Vile Parle for sale too. Can the businessman who once couldn’t seem to put a foot wrong salvage something of what he inherited?
Mallya continues to be the UB chairman and to own RCB. RCB is worth an estimated $640 million, a huge chunk of what is regarded as his current net worth, around $730 million. For all the constant news of impending disaster, he still has 3.65 M Twitter followers, all keen to see how he copes with changing times. What stunt is he going to pull next? Or has he played all his trump cards? Are his glory days over for good?
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