Not very long ago, there was a king. They called him the King of good times. He owned an IPL team, a F – 1 team, two football teams, an airline, a liquor brand, the most desirable calendar and a number of companies. The charming King had all the money, power and glamour. He was the celebrity of all celebrities, messiah of struggling models and godman of some cricketers. His extravagant life style was widely appealed, envied and admired. He was considered as a larger than life astute entrepreneur, India’s very own Richard Brenson. All of us know the name of that king. He was none other than Vijay Mallya.
However, very few of us know how he remained the king of good times for so long. Let me tell you. After taking over the UB group from his father, Vijay Mallya consolidated, acquired and diversified many companies to mainly focus on the core family business of beverage alcohol. To his credit, he made the group a conglomerate of 60 companies having turnover of more than 10 billion. But that did not make him the king. He was rather facilitated by some more than generous banks and the inefficient corrupt government in centre. His good times significantly overlapped his companies bad times.
It all started in 2005 when Vijay Mallya chose to enter into the unknown forte’ of airlines business. In eight years of its operation, Kingfisher Airliner never once registered a profit. By 2013, the alliance had more than 16,000 crore losses. It is intriguing that even after record loss Kingfisher Airlines became the second largest airline in India. The banks continued to give loans, UPA govt continued to extend the all-out support and the good-time was artificially sustained.
Despite of being a dreadful borrower and having non-performing assets, banks lent Mallya on the brand value, movable property and on current asset.
Some of the examples are as below:
- In 2010, State Bank of India gave Vijay Mallya a loan of 1600 crore to revive Kingfisher alliance in lieu of the ownership of all trademarks and goodwill. The trademark and goodwill will get SBI a meagre 6 crore now.
- Another nationalised bank IDBI extended the loans worth 900 crores despite the negative credit rating. The loan was sanctioned despite the bank’s internal report warning against it. The asset pledged against the loan was again trademark and goodwill.
- Bank of India lent Mallya’s Kingfisher airlines 650 crores the current assets which include items like air conditioners, tractors and even folding chairs.
Likewise, a total of 17 banks lent Vijay Mallya loan in excess of 7,000 crores after second debt restructuring for the airlines. This consortium of banks was mostly nationalised banks led by State bank of India. Then UPA govt provided a free way to Vijay Mallya for accessing the taxpayer’s money at the time when the warning bell was rung by many. More expectedly the Kingfisher airlines grounded two years later. According to some unconfirmed reports, Mallya had syphoned a substantial chunk of borrowing in tax havens abroad. How felonious could it be? But not more inappropriate than Congress accusing NDA to let Mallya escape.
It was the UPA govt who let Vijay Mallya bluff the banks. It was the UPA govt who made the mockery of a banking system and gave loans to Mallya against zero and minimal guarantee. It was the UPA govt who never tightened the noose around the defaulter even after the airlines grounded, employees laid off and assets sold.
The incumbent govt was reeling under bad debts since it took to charge. Public sector banks are sitting on over Rs 7 lakh crore stressed assets, including NPAs and restructured loans. Between 2004 and 5, more than Rs 2.11 lakh crore were written off as bad debts. Vijay Mallya with a defaulter of around 9,000 crores is one of such many cases. Even before the banks consider to move against Vijay Mallya to Supreme Court and request the court to restrict his travel, he flew to the London. In such circumstances it is very less a govt can do.
Congress will not get the first-mover advantage here by raking up Mallya’s issue. They are already on the swampy ground and the more it will be stretched the more they will sink.