Vijay Mallya has finally exited United Spirits Limited (USL), which he built up as India’s largest liquor company, after he stitched a deal with majority owner Diageo that absolves him from charges over diversion of funds from the liquor major to other United Breweries (UB) Group firms.
Mallya, once known as "the king of good times", has long been in the limelight, for reasons right and wrong.
The sequence of events that culminated in Mallya's exit began when the USL board in April last year asked Mallya, its chairman, to quit the board after a PriceWaterhouse UK (PwC) team found no clarity on the recovery of loans worth Rs 2,100 crore to UB Group entities. Diageo had hired PwC to conduct a forensic audit after the British liquor firm faced flak for its silence on alleged fund diversion from USL to UB Group entities between 2010 and 2013.
Mallya's deal ensures Diageo will pay him $75 million or nearly Rs 500 crore over five years in return for a no-interference, non-compete contract globally, except in the United Kingdom where the former USL chairman has said he wants to go and live.
However, Mallya's problems are far from over. In November last year, State Bank of India, the country's largest lender, declared beleaguered Kingfisher Airlines and its guarantors UB Holdings and Vijay Mallya as wilful defaulters.
Here is an abbreviated timeline of Mallya's rise and decline:
- Mallya, who turned 60 last year, became the chairman of the UB Group in 1983 at the age of 28. His father, Vittal Mallya, had built the pan-India liquor giant and it was his sudden demise that catapulted the son into the hot seat
- Within a year of his elevation, Mallya entered into a corporate battle with the late Manu Chhabria. The fight, which lasted nearly 20 years, began when Chhabria made a hostile bid for liquor major Shaw Wallace and Co (SWC). Mallya claimed that the bid was made jointly by an offshore firm in which he was a partner but Chhabria disputed his claim and gained ownership of SWC. Even as legal battle raged in Hong Kong, Mallya went on to partner with Chhabria’s estranged brother. It was only in 2005, three years after Chhabria's death, that the issue was resolved when Mallya finally acquired a controlling interest in SWC from Chhabria's family
- It was on May 9, 2005, that Mallya's Kingfisher Airlines, which would become the proverbial albatross around his neck, flew its maiden flight. In June the same year, it became the first Indian carrier to order the Airbus A380
- Mallya bought over the crisis-ridden Air Deccan in June of 2007. Through a reverse merger, Kingfisher Airlines became Air Deccan and once the entire acquisition was completed Mallya changed the airline's name back to Kingfisher Airlines in 2008. The acquisition basically allowed Kingfisher to sidestep the 5/20 rule, under which domestic airlines must have been flying at least 5 years and have 20 aircraft to fly overseas
- A few months after his acquisition of Air Deccan, Mallya decided to foray into the world of Formula One racing. Along with Dutch entrepreneur Michiel Mol, he became the new owner of the Spyker Formula One team. The team would be renamed "Force India" and currently goes by "Sahara Force India F1 Team"
- In November of 2009, Kingfisher Airlines reported a net loss of Rs 418.77 crore during the second quarter. Its income from operations declined by 13.6% during the quarter compared to the same period in the previous year. Consequently, the airlines had to lay off close to a 100 pilots
- In March of 2012, Kingfisher Airlines announced the curtailing of its international operations. That same month the Revenue department threatened to take the airline to court over alleged service tax evasion. The good times appeared to be over as the airline, burdened by a debt of over Rs 7,000 crore, suspended operations from Kolkata, Hyderabad, Patna, Lucknow, Thiruvananthapuram and Bhubaneshwar
- 2012 proved to be unkind to Mallya as his airline was beset by multiple strikes by its staff and the government's refusal to bailout the carrier. A SBI-led group of lenders also turned down a request for a working capital loan and that was followed by the DGCA issuing a show-cause notice to Kingfisher, asking why its flying permit should not be suspended or cancelled. During the same year, in September, Mallya gave guarantees worth Rs 5,904 crore for the carrier’s loans and other liabilities in 2011-12
- In November of 2012, global liquor major Diageo announced its decision to acquire 53.4% stake in USL for Rs 11,166.50 crore
- In February of 2013, Kingfisher lost its international and domestic flying slots even as a consortium of banks started recalling loans amounting to Rs 7,500 crore
- Eighteen months later, on July 17, 2014, Kingfisher was declared to be the top non-performing asset in the country as it failed to repay loans of over Rs 4,000 crore — a large part of which was borrowed from state-owned banks.
- On August 21, 2014, Punjab National Bank issued a notice to Kingfisher and alleged that the carrier had wilfully defaulted in payment of outstanding dues of over Rs 770 crore. Additionally, on September 1, 2014, United Bank of India declared Mallya and three directors of Kingfisher Airlines as wilful defaulters
- In October of 2015, The Central Bureau of Investigation (CBI) conducted raids on Vijay Mallya and the by-then defunct Kingfisher Airlines in connection with alleged loan default of Rs 900 crore. These raids were in relation to an inquiry instituted by the CBI against IDBI Bank and Kingfisher Airlines in 2014. The bank had sanctioned a loan of over Rs 950 crore to Kingfisher, despite the airline having a negative rating
- The same year, in November, the SBI-led consortium of lenders to the defunct Kingfisher Airlines decided to e-auction movable assets of the Mallya-controlled company in Mumbai, as a step to recover dues worth over Rs 6,993 crore. Mallya's troubles only grew when, after a protracted legal battle, SBI declared him to be a 'wilful defaulter' for defaults on nearly Rs 7,000 crore loans to his airline
- That same month, YES Bank invoked 3.02% of UB’s stake pledged by Mallya and valued at Rs 770 crore for loans defaulted by his airline. HDFC followed suite by invoking 150,000 shares of USL, valued at Rs 47 crore.
- In January this year, the Ministry of Corporate Affairs sent a notice to USL, asking why action should not be taken against the company, its former directors and officers, which include its chairman Mallya.Additionally, In February, Punjab National Bank declared UB a wilful defaulter