Dethroned King of Good Times

Vijay Mallya, India’s flamboyant businessman and the chairman of the United Breweries, has fallen hard. He still has his sprawling villas and tens of nauseatingly luxurious cars, but lost his crown – the “king of good times”.

Now, Mallya’s Kingfisher Airlines is crippled by debt, shutting down over two years ago – even failing to pay its employees – it still owes about Rs 7,500 crore of loans to several state-run banks, including country’s largest lender, State Bank of India (SBI).

After shuttering his airline, selling off the bulk of his cash-oozing liquor business and leaving lenders gasping, Mallya has put on his boxing gloves to skirt being declared a ‘wilful defaulter’ by creditors. 

But the Kingfisher saga is about more than just 4,000 jobs, an airline, large amounts of public money and the career of a maverick tycoon. It is about India. Economic growth is slowing – falling below the level seen by economists as necessary to keep up with the fast-growing population – and confidence is faltering. There are huge problems with key parts of the infrastructure – as shown by the three-day power cut that hit hundreds of millions in the summer. Graft is rampant, the currency weaker than it has been for years and public finances fragile.

When it was launched in 2005, Kingfisher Airlines was intended to break the mould of Indian air travel. For decades, Indian travellers had put up with a single national carrier. The economic reforms of the early 1990s that partially dismantled a socialist-style command economy that had limited economic growth to negligible levels in previous decades led to a boom in private air operators.

Mallya, who inherited the chairmanship of United Breweries when he was 28, spent the early years of the post-reforms era consolidating its dominance in the beer and spirits market. As well as a talent for self-promotion and a taste for high living, Mallya showed acumen, determination, drive and considerable appetite for risk. Kingfisher beer became a household name and the business of making it hugely profitable.

But Kingfisher Airlines was a late addition to a crowded and tough market. Its USP was “glamour”. Flying Kingfisher meant being part of the Kingfisher world, a world of parties, fun and good-looking, wealthy people. It meant being part of the new, booming India. The first wave of private airlines had simply tried to provide a better option to the slow, dirty, run-down train network. Kingfisher went much further. It was aspirational.

However, by October 2012, the wheels came off. Kingfisher had been in operation for seven years, each of them hopelessly unprofitable. Its accumulated losses, at a numbing Rs 16,000 crore, matched the extravagance of its founder.

As Kingfisher stacked up these losses, taxpayer money dressed up as loans, was easy and forthcoming. Public sector banks didn’t instinctively or aggressively harden against Kingfisher. Instead, they coddled the airline.

In the meantime, his employees at Kingfisher were going unpaid, airports were unable to collect landing fees and fuel suppliers were retreating after emptying their tanks and declined payments. In the world of borrowing, the airline fast became super-duper junk.

However Mallya’s net worth is still a gawking $750 million (as of October 2013). By no means is he a pauper or a social pariah.

He still has his co-owned Formula One team Sahara Force India. His companies own Indian Premier League team Royal Challengers Bangalore, the I-League teams Mohun Bagan AC and East Bengal FC. And Mallya is also a member of the World Motor Sport Council representing India in the FIA.

Mallya’s employees may still be waiting for their paycheques but his life goes on in the media rampage highlighting the once powerful tycoon’s slow demise.