BENGALURU: The king of good times has flown out, and away. But questions remain on what brought down Vijay Mallya’s once-thriving business empire. Was he really a bad businessman or a good businessman who took one wrong decision?
While venturing into aviation sector in his inimitable style with Kingfisher Airlines is often seen as what brought his downfall, the rot had set in much earlier, say people in the know of things. In the 1990s, he splurged on many companies that were sick. His dream to make it big in politics with money power and without caring to be grounded is also among the causes that brought down his empire.
“Among the many businesses he invested in that did not earn money were Vijay TV, Best and Crompton, The Asian Age and CineBlitz. Best and Crompton even began taking fixed deposits at a couple of percentage points higher than the market rate, and he failed to return it,” said a person who knows of his businesses.
It was his flamboyant nature and penchant to hog the limelight that drew him to aviation sector, which is billed as a cash guzzler with very thin margin of returns that could flow only if one shows the financial discipline and stamina over a very long period of time. Definitely a trait not found in Mallya’s DNA.
Airline being a high-profile business, it attracted his interest despite being advised against it by his top officials. Mallya was in a hurry to buy planes. He had plans of buying one Airbus A-320 every month until March 2012. No wonder Mallya borrowed big from public sector banks to drive his dream to emerge as the king of the skies.
He was a man in a hurry to fly Kingfisher Airlines to international destinations. A domestic airline was allowed to do that only after it completed five years of operation. But he is not the man who can wait. He bought Air Deccan in 2007 to get around the regulation by paying a high cost.
He gave a new identity for Air Deccan as Kingfisher Red. By doing this he diluted the premier positioning that Kingfisher Airlines had acquired in the minds of the consumer.
All this happened when the price of aviation turbine fuel was quite high and aviation companies were struggling to stay afloat. He ended up pouring more good money after bad. Finally, he ended up owing state-owned banks about Rs 7,000 crore when his airline went belly up. His ability to pull strings right at the top is said to have helped him secure more and more as loans despite his inability repay the older ones.
“He has no friends nor does he have any enemies,” said a person who has known him up close and personal. “He will use anyone to meet a need of his, and later even refuse to acknowledge the person,” he added.
Mallya, whose net worth is estimated to be around $1.2 billion, is known for his flamboyant lifestyle and a chilled out attitude. He is known to be very religious. He had spent `18 crore on gold plating the roof of the sanctum sanctorum of Sabarimala temple. It took 32 kg of gold and 1,900 kg of copper.
Paying the price for putting flash over prudence
Being the showman, Mallya could not resist the allure of politics. His ambition to rock in national politics by taking over as the national working president of Janata Party in 2004 was another case of paying the price for putting flash over prudence. “His campaign style for the party in Karnataka and Kerala with boasts of emerging as an alternative for Congress was a shocker for those who watched him from close quarters. Money flowed like water from his breweries to nurse his political dream. The company officials were reduced to party workers as he hit the road for campaigning. It was an open display of financial indiscipline and profligacy without caring for the basic sense of being rooted to the ground and reaching out to the masses,” recalled a journo who was part of the media team that extensively covered his campaign more than a decade ago.