Vijay Mallya: The king who fell to earth
India's self-styled King of Good Times and airline tycoon has hit turbulence. Andrew Buncombe reports from Delhi
Several summers ago, the Indian tycoon Vijay Mallya threw a party for 100 or so people at his cliff-top home in Goa. Golf buggies were used to transport guests who arrived at the gates of his Aguada property to the lawns where a barbecue of the freshest seafood awaited them. Mr Mallya, dressed in trademark colourful shirt, was a generous and gracious host, chatting with everyone and mingling at his private bar. The beer he served was chilled Kingfisher.
For many years, Mr Mallya, the man who models himself as the King of Good Times, has been inseparable from his Kingfisher brand; be it his ubiquitous beer, his Formula 1 racing cars or his airline. It is said he personally interviewed the young women who would serve as stewardesses. And for most of that time, the strategy and flamboyance has served him well.
Now, however, the 55-year-old finds himself in front of the media for quite different reasons: trying to explain why his airline is not enjoying quite such a good times. It has been forced to restructure debt and look for an injection of capital after it posted quarterly losses of 4.7bn rupees (£58m).
He had been forced to address the situation not simply by the bad figures, but by his decision to cancel dozens of flights as part of a restructuring that will see his budget airline business, Kingfisher Red, scrapped and a concentration on the more profitable, full-fare market. This will require a reconfiguration of many of his planes. The low-cost end of the industry, he said, was likely to turn into a "bloodbath".
During a two-hour press conference last week, Mr Mallya and Ravi Nedungadi, the chief financial officer of United Breweries Group, the parent company, blamed soaring jet-fuel prices and high taxes levied by state governments. Another factor, Mr Mallya said, was the current weakness of the rupee. They outlined a plan to raise around 10bn rupees in new loans for Kingfisher, including 1.5bn rupees that would be spend on the overhaul of the aircraft. He said he had even considered importing jet fuel to avoid high taxes.
"The state governments are enjoying windfall profits directly at the cost of the aviation industry," he said. Yet he also scolded reporters, saying: "To write the epitaph of Kingfisher Airlines constantly is not fair."
It is unlikely that Mr Mallya is going to be forced to sell off his Goan home, with its elegant interiors reportedly chosen by his second wife, Rekha, or his £63m yacht, the Indian Empress, which he keeps to sail in the Arabian Sea.
Likewise, there is no sign that Mr Mallya intends to offload his cricket team, the Royal Challengers of Bangalore, which perform in the hugely successful Indian Premier League that the tycoon bought in 2008 for £70m.
His main cash cow, the distillery and brewery business UB Group, which includes his purchase of Whyte & Mackay, continues to be very healthy. Recently the spirits arm of the company claimed a 46 per cent rise in profits for the six months to the end of September.
But Mr Mallya's Kingfisher troubles, and his apparent frustration with the media, whom he keeps accusing of misreporting events, certainly appear to highlight both the challenge of the airline industry in India and the danger confronted by those who seek to expand quickly.
One business analyst, who asked not be named, said that Mr Mallya has been hit by the high fixed-costs faced by all airlines, in particular that of jet-fuel. "Whether you are flying richer, business travellers or poorer farmers, these fixed costs are the same," he said.
The analyst said that Mr Mallya had made the 2008 purchase of Air Deccan, which became Kingfisher Red, at the top of the market. Since then, the environment had been tough for all operators, particularly those who were seeking to expand.
Kingfisher started flying to London three years ago and secured the number two position in the Indian airline business. "Business opportunities are big and operators feel the need to expand quickly to get a large slice, rather than focusing on a narrow share," he said.
Mr Mallya appears upbeat. One report suggested that he was close to sealing two separate deals worth a total of £235m; one with a private Indian investor and the second with a consortium of 14 banks, led by the State Bank of India. On Twitter, Mr Mallya subsequently said the report was "factually wrong", though he did not provide further details.
Over the weekend, Mr Mallya declined several requests for an interview and a spokesman for Kingfisher failed to answer questions about the airline's future. The spokesman said Mr Mallya had a busy schedule, but the truth may have been a little more nuanced. Over the weekend, he took again to Twitter to announce: "Enjoying a chilled Kingfisher in a Goan shack. Overwhelmed with affection [and] good wishes from so many people despite murderous media reports."
Flying high: the CV
The colourful business tycoon Vijay Mallya is the son of an industrialist, the late Vittal Mallya. He owns a cricket team, an airline, a luxury yacht, a number of vintage cars and a Formula One racing team.
He is also a member of the upper house of the Indian parliament, where he sits as an independent.
Yet it is his ownership of United Breweries, famous for its Kingfisher beer and cheap whisky (as well as the distinctly more upmarket Whyte & Mackay), that brings him his wealth, put by Forbes at £900m.
He also has a love-hate relationship with the media. While he appears to enjoy the coverage of his lavish parties, he has been less impressed by the coverage of his airline's recent problems.
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