‘The King of Good Times’ Vijay
Mallya seems to be going through
an ironic period in his life. Now
that his ‘good times’ appear to be
far-fetched, I’m sure he’ll welcome
‘mediocre, debt-free times’ with
open arms.
Once termed the Indian version of
Richard Branson is now a ‘willful
defaulter’. Vijay is being chased
by almost every institution in the
country — the banks, regulators
and, even the judiciary. What did
he do? Well, not much! As
everyone knows how big of a
collector he is, he just gathered a
consortium of 17 loans for himself
from, mind you, state run banks,
and they all add up to a whopping
amount of Rs 9,000 crore. No
biggie, right? And when everyone
thought this would end, Mallya
thought to himself, “Hmm...
Wouldn’t this be a lovely time to
go for a spontaneous vacation to
my country house in London?
Except a couple of loans, I have
given people no reason to think
I’m an absconder. Might as well
pack 7 bags in case I don’t forget
anything.” Okay, jokes aside.
It’s not that Vijay Mallya was
always this bad at making
business decisions (or any
decisions for that matter). It was
his skills and money, which he
very conveniently inherited from
his father that made him the
flamboyant billionaire he is. His
good days include the launch of
Kingfisher Strong in 1999 that
changed the consumption of
alcohol nationally. He then
expanded his range by buying
brands like Royal Challengers,
Bagpiper whisky and Romanov
vodka. He launched Kingfisher
Airlines and bought IPL and F1
teams.
When everyone was busy getting
impressed by his unstoppable
shopping spree, no one
questioned where he was getting
the money for all this? We kind of
went along with him ‘being’ rich.
So how did his story take a 180
degree turn? He made some pretty terrible decisions along the way.
And we made a list so history
wouldn't repeat itself.
When your business
doesn’t make a profit for
8 years, take the hint
This goes completely above me.
Once the second-largest airline in
India, Kingfisher Airlines was
never once able to earn a profit
and it still went on for 8 years. In
2009, the net loss went from Rs
213 crore in 2008 to Rs 1,317
crore. And that didn’t stop Mallya
from continuing. His delusional
optimism of reviving the company
went to such extent that the
accumulated losses as of March
2013 stood at a whopping Rs
16,023 crore. He did cut flights
from 300 to 110-125, but it never
reached the skies Vijay was so
hopeful about.
Lesson- Know when to give up.
Hard work is appreciated but
when it doesn’t yield results, you
should know when to stop.
When bankrupt and you see some money coming your way, how about paying the employees
first Employees maketh the company.
Sure, employer will tell what work
to do but it’s the hard working
members of staff accumulated over the years that will make the work happen. At the end when
company gets a big profit, it’s the
owner that gets it. An employee
gets his regular salary.
Given that and how indebted
Mallya was by 2012, it was his
inability to pay salaries to 1500
employees that stopped the
beleaguered airline to continue
operating. When asked why he
couldn’t he simply answered, “I
don’t have money to pay your
salaries”. Okay, believable. But
then Diageo acquired 27% stake
in United Spirits Ltd. for Rs 6,500
crore in 2013, but no lender or
employee was given a single
penny, without any reasons
stated. Mallya had his own wish
list to fill. He spent Rs 9.5 crore
to get Australian all-rounder
Shane Watson to play for his Royal
Challengers Bangalore Indian
Premier League cricket team this
season. In December 2015, his
birthday became a gala with 200
people and featuring a firework
display and performances by Sonu
Nigam and Spanish pop star
Enrique Iglesias worth 3.5 crore.
The whole party cost him more
than $2 billion. Money well spent,
eh?
Lesson – If you’re in debt, a
monstrous one, and your
birthday is approaching and you
have no plans to give salaries to
your employees, it’s probably
better to take it down a notch.
Do not mess with the
banks If Mallya finds it hard to think in a reasonable business-like
manner, he should probably think
about the welfare of people as a
member of parliament. But how
dare we think about him thinking
about the welfare of people who
pay taxes to state run banks when
he can’t even pay his own
employees. Mallya owes Rs 9061
crore to 17 banks which include
State Bank of India, Punjab
National Bank, UCO, Central Bank,
Axis Bank, Bank of India, Bank of
Baroda, IDBI, United Bank
Corporation Bank, State Bank of
Mysore, Indian Overseas Bank,
Federal Bank and Punjab & Sind
Bank. Mallya claims to have paid
Rs 1,200 crore worth of loan
already.
Hoping that the airline would
revive sooner or later and pay
back the money, banks kept giving
loans and Mallya accepted them.
Finally, when things got out of
hand and banks panicked,
Kingfisher, was declared an NPA by most banks, including SBI, towards the end of 2011 and beginning of 2012.
The only hope for banks is if
Mallya has a change of mind and
decides to pay back banks from
his personal wealth (Mallya has
shares worth Rs 7000 crore in
various companies and lot more in
fixed assets). Chances of that
happening seems as minimal as
Trump leaving the 2016 Presidential debate.
Lesson – A stitch in time saves
nine. The banks, instead of
encouraging Mallya to take loans
even when he was in debt,
should have spent time on
making him understand how bad
debts can be.
Have the courage to face your mistakes Everybody makes mistake. Mallya’s happen to be worth Rs 9,000 crore. In any case, how is leaving the country with no prior notice the best idea he could come up with? We get that he messed up big time, but how about giving an explanation first. We don’t mind him taking all his extravagant vacations but expecting people to
believe that he wants to go to his
country home because he wants to
'see his children' is either him
considering people are stupid or a
bad excuse made in haste.
Lesson – Be smarter about your
mistakes. They’re going to be out
in the open at some point. The
better path will be to accept
them and save the drowning
boat. Right your wrongs always.
(Source:Entreprenuer India)
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