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Pinch-hitting for Mallya

D K Audikesavulu Naidu has made his resources available to Vijay Mallya more than once

Raghu Karnad 

In the lobby of UB Tower, the new headquarters of the in the heart of Bangalore, the walls are hung with massive prints of the latest Kingfisher Calendar bikini shoots. Tear your eyes off them and you can flip through a book of warm tributes to Vijay Mallya, a gift to the chairman from his office on his 50th birthday. Prominent Bangaloreans, from to designer Manoviraj Khosla, are in here, but one name is unfamiliar: DK Audikesavulu Naidu. He writes: “One of the lessons I personally learnt from him [Mallya] is how to balance hard-headed business decisions with a heart. Sometimes he may be emotional but it will be only for a short while.”

“Hard-headed” cannot begin to describe the decisions that Naidu, known as DKA to friends, has made in his career. Starting out as an employee at a distillery in Chittoor, Andhra Pradesh, he has risen to an incredible position of political and industrial influence spread across at least three states (Karnataka, and Tamil Nadu), three major political parties [the Congress, Telugu Desam Party and Janata Dal (Secular)], and one leading liquor producer (Mallya). Vijay Rekhi, the former director of United Spirits, describes him as “a local entrepreneur who has associated with the group by making his resources available to us.” In fact he is one of Mallya’s most intimate business associates in south India, and a go-to guy for the company in exigent circumstances.

As a young engineer, DKA became a member of the Congress in Chittoor, the district of which adjoins both Karnataka and Tamil Nadu (each state was struggling to enforce different excise and prohibition regimes). When he leased the Sreenivasa Distilleries, he began one of the great careers in the recent history of Indian liquor. Although a Congressman at home, DKA built ties with Ramakrishna Hegde, the Janata Party chief minister of Karnataka. In 1984, after Hegde’s government was hit by a scam relating to arrack-bottling contracts, DKA scooped up some of the disputed contracts. Yet the arrack industry was going into terminal decline, and sharp entrepreneurs were looking for a piece of its booming rival, IMFL (Indian-made Foreign Liquor). Hegde was close to another liquor baron, Vijay Mallya: their respective chief-ministership and chairmanship had begun in the same year, and Mallya’s later political attempts would always remain in the fold of Janata splinter parties. DKA’s bond with the formed when he became its state distributor. He soon shifted base from Chittoor to “My wife and children were born and brought up here,” he says. “I thought this will be any-day [the place] for any expansion to business activities.”
 

THE MALLYA CONNECTION
  • DKA is one of Mallya’s most intimate business associates in south India
  • His Karnataka Breweries and Distilleries is a keystone in UB’s regional supply chain
  • Has been a UB distributor and sold a factory to Mallya
  • Has given personal loans to top UB officials, according to his declaration of assets to the Election Commission
  • Bought Mallya Hospital “as a favour” to Mallya who is said to have had trouble making it profitable
  • Provided offices that served as UB’s interim headquarters while UB City was being built 
  • Produces 20,000 cases of liquor exclusively for United Spirits every day

Through the ‘90s, the liquor-distribution system was fiscal quicksand. States are empowered to collect excise duty on IMFL, but in Karnataka a central feature of state politics was excise evasion in cahoots with the ruling party. There was even a word for the quantum of liquor overlooked by the excise directorate: “seconds”. Seconds diverted vast profits to liquor producers and their political patrons — the prime reason Karnataka’s notorious “liquor lobby” grew so powerful. By 1999, the Karnataka Tax Reforms Commission found the share of excise in state revenue had fallen from 16 per cent to less than 3 per cent over the decade, even as IMFL consumption grew at double-digit rates each year. Only in 2004 did Krishna take the bold step of nationalising liquor distribution, and ending the seconds regime; until then, DKA remained UB’s main IMFL distributor.

By then, DKA had acquired his own distilleries, as well as a sick government company which he renamed Karnataka Breweries and Distilleries. Today, this company is a keystone in UB’s regional supply chain. Until a decade ago, UB brewed 500,000 litres of beer a month at its century-old plant in the centre of The plant was demolished to make way for UB City, and that was possible because DKA built a state-of-the-art brewery for UB in Nelamangala, with twice the capacity; UB purchased the Nelamangala brewery from him in 2008, once it had found the funds. The adjacent distillery, which DKA owns, produces 20,000 cases of liquor exclusively for United Spirits every day. (He also provided the offices in the Anchorage building, which was UB’s interim headquarters while UB City was being built). This was characteristic of the way DKA’s clout and liquidity have supported the pace of Mallya’s expansionary plans.

* * *

Throughout this period, DKA was climbing the political ranks. “I have continual association with the Congress party right from ‘65-’70 onward,” he says, somewhat simplifying the matter. By 1993, he was a loyal enough Congressman to be charged, along with several others, with bribing MPs to support the central government of P V Narasimha Rao, himself an Andhra Congressman, through a tough “No Confidence” vote. None of the accused was finally convicted. The year after the vote, DKA was appointed Treasurer of the Congress Committee.

In 1996, he finally ran for Parliament from Chittoor, but lost. DKA then began to be courted by the Telugu Desam Party, where the top leadership better represents Kammas, his own caste, than the Reddy-dominated Congress. Chandra-babu Naidu appointed him chairman of the Tirumala Tirupati Devasthanam, probably the richest temple trust in India. “He used it very cleverly for his business contacts throughout India, bringing to the temple and giving them VIP treatment,” says a source in politics. In 2004, he ran for Parliament again, this time with TDP, and won.

“Hard-headed business decisions”, as DKA wrote in the birthday book, were now his metier. In November 2007, for instance, a power-sharing agreement between the Janata Dal (Secular) and the Bharatiya Janata Party in Karnataka fell apart. BJP had supported H D Kumaraswamy as chief minister through the first half of the Assembly term, but JD (S) reneged on its promise to support B S Yeddyurappa (the BJP candidate) in the second half. The government collapsed. Seven days later, DKA (still a TDP MP) was sitting at the Delhi residence of JD (S) chief Deve Gowda, in the company of Gowda, Congress MLA Roshan Baig and others. Journalist D P Satish was there too. “It was around 9.30 AM, and they were all watching news on TV,” Satish recalls. “Gowda was hoping that the Congress would join him to form a coalition government once again, and DKA was sitting there, praising Gowda and his political acumen.” Suddenly, the TV channels began to flash the news that the Centre has dissolved the Assembly and planned fresh elections. “Gowda was shocked beyond belief,” says Satish. “Within just five minutes, his ‘supporters’ left quietly. DKA was the first to leave — without even saying bye to Gowda.”

Indeed, back in Andhra Pradesh, the Congress had routed TDP by now, and DKA found himself again needing to slip out of the door to join the stronger side. In Delhi, another Congress government was facing another no-confidence vote: another opportunity for DKA to help out. It was July of 2008, and Manmohan Singh needed the support of every MP he could get. Behind the circus of MPs waving around bundles of cash in the House, DKA quietly broke with the TDP whip, voted against the motion, and rejoined the Congress flock. The next year he was presented the Rajiv Gandhi Rashtriya Ekta Samman award, an award once given to Mother Teresa.

* * *

These days, DKA gives audience in a cramped room just off the reception area of Mallya Hospital, in central This is the chairman’s office — his after he took over the hospital from Mallya (he had opened it, in partnership with Apollo Hospitals, as a tribute to his grandfather, an army doctor). According to one doctor, Mallya had trouble making it profitable, and was tired of trying, so “DKA bought it, as a favour”, and has run it ever since. Inside the office, he sits squeezed between a rack of framed photographs of Mallya and Sai Baba, and a desk covered in JD(S) candidate lists. Behind him, on the other side of a plateglass window, ambulances with UB’s Pegasus logo steer out of the hospital basement. It’s a little claustrophobic, but otherwise the perfect position for someone whose influence straddles liquor production, politics, religious trusteeship and an empire of philanthropic and medical institutions.

A big man with a pointed bald head — every inch the “Doddavaru”, or patriarch, as his staff refers to him — DKA rocks in his chair continuously, and is impatient with questions about his liquor business. “I wanted to come out of the liquor industry,” he says. “I am now fully involved in philanthropic and social activities.” He rattles off a list of trusts, hospitals and spiritual institutes he has funded; donations to mathas and peethas. He is still chairman of at least eight trusts and companies, including steel mills, hospitals and colleges. It’s an impressive resume, all the better to stonewall questions about the original business. DKA is still the chairman of Karnataka Breweries and Distilleries, and a dedicated UB supplier. Other aspects of his relationship with the are less clear: his declaration of assets to the Election Commission has shown personal loans to top UB executives. And he has a long history of pinch-hitting for Mallya. Depending on how Mallya’s corporate debt crisis plays out, we may hear much more about DKA in the near future. In the meantime, he restricts his comments on liquor to its growing importance in our lives. “If I say I don’t drink, they’ll not even call (me) for parties,” he says, as he shakes in his chair. “‘He’s a useless fellow,’ they’ll say. ‘He doesn’t even drink. He’ll not be useful in society.”

First Published: Sat, September 01 2012. 00:34 IST
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