UB Group promoter and liquor industrialist Vijay Mallya was arrested in London on Tuesday (April 18), almost 13 months after fleeing India. The industrialist got bail later. Mallya, who was ranked the 45th-richest Indian with a net worth of $1 billion by Forbes in March 2012, left for London on 2 March 2016, days before a group of creditors approached the Supreme Court to bar him from leaving the country Will Vijay Mallya’s arrest be seen as a significant success for Prime Minister Narendra Modi in the fight against tax evaders and money launderers? Will we be able to recover the debts from Vijay has to be seen?
Vijay Mallya owes around Rs 10,000 crore, including bank loans, tax arrears, and interest dues. This does not include arrears claimed by his former employees.
Netflix has come out with investigative documentary series, called Big Bad Billionaires, which explores the greed, fraud and corruption that built up and ultimately brought down India’s most infamous tycoons, Vijay Mallya, Nirav Modi and Subrata Roy
Table of Contents
Overview of Vijay Mallya
This 3-minute video gives an overview of Vijay Mallaya, King of Good times.
Vijay Mallya Extradition
Flamboyant businessman Vijay Mallya, pursued by Indian authorities over unpaid loans tied to his defunct Kingfisher Airlines, was arrested in London briefly on Apr 18 2017 and appeared in court for an extradition hearing.
The UK government refers the extradition request to the court after examining the worthiness of the case. In the Mallya case, the matter has been referred to the court, where Indian authorities will have to present the case for extradition of the liquor baron.
Extradition is resisted by offenders on grounds including biased judicial system, not getting a fair trial in India, politically motivated case, among others. Even if Mallya loses the case at the magistrate’s level, he will have two or three higher levels of the judiciary to appeal to. If he fails to win even at the Supreme Court, then the final determination will be a political one, made by the British Home Secretary, Amber Rudd.
Mallya, who was ranked the 45th-richest Indian with a net worth of $1 billion by Forbes in March 2012, left for London on 2 March 2016, days before a group of creditors approached the Supreme Court to bar him from leaving the country. His Kingfisher Airlines, founded in 2005, was grounded in 2012 amid mounting debt and losses. SBI, which has the biggest loan exposure to Kingfisher Airlines at Rs.1,600 crore, and 12 other banks moved the top court a day after a tribunal blocked Mallya from accessing a $75 million (about Rs.515 crore) payout promised to him by Diageo Plc. SBI declared Mallya a wilful defaulter in November 2015. On 25 February, Diageo agreed to pay Mallya $75 million over five years and drop all charges of financial impropriety against him in return for stepping down as chairman of United Spirits Ltd, a company now controlled by the UK liquor maker.
The Enforcement Directorate (ED), on 3 Sep 2016, issued its second attachment order for assets worth Rs 6,630 crore against beleaguered businessman Vijay Mallya as it seized his farmhouse, flats, and FDs in connection with its money laundering case against him and his associates. The total attachment made by the agency, in this case, has now shot up to Rs 8,044 crore as it had attached assets worth Rs 1,411 crore a few months back. Officials said while the Enforcement Directorate has till now been effecting the seizure of assets under the stringent provisions of the Prevention of Money Laundering Act (PMLA), the next edition of attachments will be carried out under sections of the Criminal Procedure Code (CrPC).
Rise and Fall of Vijay Mallya
Following image shows rise and fall of Vijay Mallya
Rise and Fall of Vijay Mallya
Loans granted to Vijay Mallya
Vijay Mallya owes around Rs 10,000 crore, including bank loans, tax arrears, and interest dues. This does not include arrears claimed by his former employees.
Loans were granted keeping in mind that Kingfisher Airlines had a fleet of aircraft as well as brand value and loans were given also on the basis of the logo and the aircraft were attached to the third party. The banks said they had individually advanced loans worth crores to Kingfisher and these had been restructured into one by an agreement on December 21, 2010. UB and Mallya had executed corporate and personal guarantees to repay the amount due under that agreement, they said. This loan had since been declared to be a non-performing asset and recovery proceedings were pending.
Vijay Mallya is personally responsible for the Kingfisher loan default (over Rs 9,000 crore to date adding the accrued interest amount) since he has given a personal guarantee to the loan. But, as it appears today, the Kingfisher-Vijay Mallya case has set a bad, dangerous precedent in the Indian banking sector. It puts at risk the very validity of a personal guarantee issue by promoters to banks against large corporate loans that are ultimately public money.
Vijay Mallya had offered to pay as much as Rs.6,000 crore to settle Rs.9,091 crore in dues his defunct Kingfisher Airlines Ltd owes to banks. It involves payment of the outstanding principal estimated at Rs 4,850 crore, an interest payout of around Rs 150 crore and the legal fees incurred by the lenders.
Top creditors to Vijay Mallya are as follows:
- State Bank of India – Rs 1,600 crore
- Punjab National Bank – Rs 800 crore
- IDBI – Rs 800 crore
- Bank of India – Rs 650 crore
- Bank of Baroda – Rs 550 crore
- United Bank of India – Rs 430 crore
- Central Bank of India – Rs 410 crore
- UCO Bank – Rs 320 crore
- Corporation Bank – Rs 310 crore
- State Bank of Mysore – Rs 150 crore
- Indian Overseas Bank – Rs 140 crore
- Federal Bank – Rs 90 crore
- Punjab & Sind Bank – Rs 60 crore
- Axis Bank – Rs 50 crore
He is not alone. There are 44 companies in all that owe 4.8 Lakh Crores to Public Sector Banks like SBI and Canara Bank. Indian banks have increasing number of bad loans. 73% of these unpaid loans are from India’s rich. Many of these unpaid loans are being written off. Why should the common people of this country suffer while rich men like Vijay Mallya escape and enjoy? If you also feel so you can sign the Change.org petition
The liquor baron has almost Rs 4,500 crore in shareholding apart from assets such as primereal estate, a studfarm, a jet and hundreds of vintage cars.
Mallya’s last settlement offer, the one publicly available at least, stood at Rs 4,400 crore. He had also said the proceeds from two legal cases involving UB Group companies if decided in their favour, could be set aside towards repaying banks. In their auction notices, lenders have been showing the outstanding amount (including compounded interest) at Rs 6,963 crore as of February 2014. With penal interest, they have been claiming in excess of Rs 9,000 crore. They have managed to recover some of the outstanding by selling shares of alcoholic beverage companies pledged by Mallya.
Until now, lenders have not committed to any figure at which they would be willing to settle and have stated they wanted to know how much money is there upfront on the table. Banks had responded to earlier settlement offers by Mallya stating that the promoter of the defunct airline should come clean and disclose all his assets. They had also insisted on a clear timeline for repayment and a list of assets that are available for sale to realize the repayment. The lenders also insisted that the proposal cannot be laced with “ifs and buts”.
The rise and fall of Vijay Mallya
Hindustan Times compares Vijay Mallaya to story from Greek mythology, when Icarus, the son of a master craftsman, Daedalus, the creator of the Labyrinth while attempting to escape from Crete by means of wings that his father constructed from feathers and wax. Icarus ignored his father advice, fly neither too low nor too high, so the sea’s dampness would not clog his wings or the sun’s heat melt them. Icarus flew too close to the sun, due to the heat melted the wax of his wings so Icarus fell into the sea.
- 1983 Vijay Mallya becomes chairman of United Breweries Group at the age of 28, following his father’s death. The business empire included liquor, pharma, agrochemicals, paints, among others
- 1986 Arrested briefly for violating foreign exchange rules during the takeover battle with Manu Chhabria for liquor company Shaw Wallace
- 1988 Acquires Berger Paints, engineering company Best and Crompton, renames UB Engineering
- 1990 Takes control of Mangalore Chemicals and Fertilizers after the Karnataka government declares the company a potential sick unit
- 1991 Sells majority stake in Berger Paints, invests in liquor business
- 1993 Sells Kissan brand to HUL
- 1994 Buys Golden Eagle Comm from Ramswamy Udayar, renames it Vijay TV
- 1996 Sells international operations of Berger Paints to Malaysian companyotential sick unit
- 1998 UB Group picks up stake in East Bengal football club; had stake in rival Mohun Bagan
- 1999 UB Group launches Kingfisher Strong beer. It is still the largest selling beer brand in India
- 2001 Buys Rifa publications, theowner of bollywood gossip magazine ‘One Blitz’
- 2004 Places winning bid of £175,000 (1.75 cr) for the sword of Tipu Sultan in UK auction
Sorry years
- 2005 Buys Shaw Wallace, gets hold of whiskey brand Royal Challenge
- 2005 Forays into aviation, first Kingfisher flight takes off; Kingfisher Airlines (KFA) becomes first Indian carrier to order Airbus A380; order cancelled later
- 2006 Buys Herberstons, maker of brands such has Bagpiper and Romanov vodka
- 2007 Buys Whyte & Mackay for £595 mn (5,950 cr), the world’s fourth-largest Scotch producer; gets major toehold in Europe’s whisky market
- June 2007 Kingfisher buys Air Deccan, primarily to fly global routes (Airlines needed five years of domestic experience to fly abroad)
- 2008 $111.6mn — Buys franchise in Indian Premiere league (IPL) — Royal Challengers Bangalore
- 2009 Successfully bids for the belongings of Mahatma Gandhi for $1.8 mn, in New York
- Mar 2010 KFA launches first international light
- Nov 2010 : 600Ocr size of KFA’s debt. Airline’s board recommends recast
- Sep 2011 Exits low-cost airline biz, closes Kingfisher Red (formerly Air Deccan)
- Dec 2011: Rs 70cr Service tax department freezes 11 accounts of KFA over non-payment of dues
- Mar 2012 Troubles mount – air transport association issues warnings against KFA bookings
- Jul 2012 civil aviation ministry refuses to bailout KFA
- Sep 2012, SBI declines KFA’s request for working capital loan of Rs 200 cr
- Oct 2012 Aviation regulator suspends KFA’s permit, airline grounded, employees go on strike
- Dec 2012 KFA loses Air operating permit (AOP) .
Misery years
- July 2013 Diageo acquires 27% stake in United Spirits Ltd (USL) 55% for Rs 6500 crore, KFA lenders don’t get any funds Diageo’s current stake in USL
- Aug 2013 SBI takes possession of Mallya’s premium property —Kingfisher House — near Mumbai airport to recover dues
- Oct 2013 84TH – Mallya’s rank on Forbes’ richlist despite all financial troubles
- Dec 2013 Dutch major Heineken, the third-largest brewer in the world, becomes the largest stakeholder in Mallya-led United Breweries Ltd (UBL). It currently holds 3836%
- Sep 2014 United Bank of India declares Mallya a wilful defaulter
- Sep 2015 After USL and UBL, Mallya loses control over Mangalore Chemicals and Fertilizers to the Zuari Group
- Nov 2015 Banks’ battle with Kingfisher Airlines continues. State Bank of India, the leading lender in the 17-member consortium, finally declares Mallya and two of his companies wilful defaulters
- Dec 2015 Mallya celebrates 60th birthday with a three-day lavish party, Sonu Nigam and Enrique Iglesias perform
- 4, Feb 2016 Buys Caribbean Premier League franchise of Barbados for $2 mn cr) —his second investment in a cricket league after the IPL
- 17 Feb 2016 Punjab National Bank (PNB) declares UB (Holdings) Ltd a wilful defaulter
- 26 Feb Mallya steps down as chairman of USL as part of the agreement with Diageo. He gets $75 million over five years
- 4 Mar 2016 SBI moves to Debt Recovery Tribunal against Mallya, seeking first right on the $75 mn (515 cr) severance package
- 9 Mar 2016 Supreme Court learns that Mallya has left the country, has already received $40 mn (270 cr) of the settlement with Diageo
NetFlix Big Bad Billionaires
Netflix has come out with investigative documentary series, called Big Bad Billionaires, which explores the greed, fraud and corruption that built up and ultimately brought down India’s most infamous tycoons, Vijay Mallya, Nirav Modi and Subrata Roy
The hour-long episodes of the series is a collage of paper clippings or TV bytes strung together with some interviews. It also features people who are close with or have closely followed. But it is more voyeurism than the pursuit of truth.
What do you feel abput Vijay Mallya? He has offered to pay the money he owes? Should Indian Govt take the money?
