VICTIM OF HIS OWN HYPE

When perception meets reality in a dark and dank corridor, it turns
into a very scary proposition. Reality is the over riding theme that
emerges as the door opens to show light. This harsh light of reality
in many ways is what Vijay Mallya is facing these days. A prisoner and
even victim of his self generated hype and larger than life persona,
Mallya's warts lie exposed. Yes, perception about him has rapidly
intertwined with reality to show how a wealthy man needs financial
crutches to set his business in order. VJM as Vijay Mallya is known is
an extremely successful businessman. You wouldn't think so if you are
watching telly or reading the papers these days. Mallya has come a
long way from the time that he raced fast cars in Barrackpore near
Kolkata with arm candy in tow. His father Vittal Mallya ran a tight
but spiffy liquor empire.

After Mallya senior's untimely death, young Vijay Mallya all of 27
took a series of well calibrated decisions to emerge as the undiputed
liquor baron of India. Slowly and systematically, he exited non core
businesses hiving off and hawking Kissan and Berger Paints ($66
million) other brands. As he once told me on board his Gulfstream jet
winging our way to Kolkata - I am not a corporate museum, I have to
constantly rejig my portfolio and reinvent to become bigger. It worked
well for Mallya, as he assiduously worked at chipping away at his
rivals in the liquor business. Finally, he owned everything from
Millennium Alcobev to Shaw Wallace, he had swept all before him and
conquered not just his rivals, but in many ways all the demons within
.

On self styled Dubai based billionaire Manu Chabbria's death in 2002,
Mallya made a hostile bid for Shaw Wallace thereby culminating a
bitter rivalry with MRC. Mallya's genius was to constantly capture the
moment in the liquor and lifestyle segment. Long years ago, while
flicking through a United Breweries archive, Mallya found a brand
called Kingfisher which dated back to 1865 and used to be then
transported in hogsheads. He liked and loved the vibrancy of the
brandname, asked his father for a million bucks to relaunch it, was
turned down, then revived it later and turned it into a mega brand
which enjoys enormous saliency with Indians around the world.
Kingfisher transcended everything and emerged as a new lifestyle brand
for neophyte Indians.

Stories about his passion for fast cars, big yachts, faster and bigger
planes, lavish parties which identified with his persona and king of
good time image has now become a millstone around his neck. With the
acquisition in 2007 of the world's fourth largest scotch maker - Whyte
and Mackay for 595 pounds sterling - Mallya enlarged his swathe.
Playboy or no playboy, Mallya has shown his shrewd side repeatedly
over the years. Till he decided that his nose was bigger than Jet
Airways's Naresh Goyal. That is where he went wrong. By entering a
cash burning, bruising business like aviation where variables like
fuel cost which are as high 40 per cent can have a debilitating impact
on the financial health of the airline. More so in a high crude
environment, where the airline business is much akin to walking a high
wire without a safety net below. Mallya has learnt to his chargin that
the good times aren’t permanent. Despite showing his intent and
ploughing in as much as Rs 980 crore over the last 12 months,
Kingfisher Airlines has been on a wing and a prayer for most part
hurtling from one crisis to another.

What started out as the best flying experience in Indian skies has
slowly but surely degenerated into a farcical play out of flights
being cancelled, customers stranded and a general air of despondency
surrounding the airline. The “guest experience” included all the
frills – valets, live in-flight satellite television, goody bags and
the smartest air hostesses in the sky. But over time his ego and
ambition got the better of him. He placed an order for 50 Airbus
aircraft - A320, A330, A350 and A380 aircraft. An embattled Mallya has
managed to keep the airline afloat despite all the travails and
tribulations. But by asking the government banks for yet another
handout, he has crossed the lakshman rekha. As civil aviation minister
Ajit Singh said – Mr Mallya needs to understand that Kingfisher is not
Air India. Yes, distortionary taxes on aviation turbine fuel and
skewed policies have played a played a part in his decline, but the
reality of not focusing on his business and allowing it to drift have
devastated the balance sheet, leaving a sea of red behind. How could
he not meet statutory obligations like tax deducted at source and
provident fund payouts? This is most galling about the way his airline
business has been run.
What are the options before Mallya? He needs to show intent. He needs
to show his commitment. Will he hawk his 42.5 per cent stake in Force
India to his partner Subrata Roy Sahara or will he put one of his
smaller companies like MCF on the block and raise cash. Mallya has
shown that he is combative and a survivor. He needs to understand that
he is trapped in a sector which is constantly in turmoil due to the
exorbitant cost of ATF. Like moths to the flame, innumerable players
in India’s short but turbulent aviation sector history have come a
cropper. Open skies is all very well, but when everyone including my
aunt want to fly the skies then one can easily liken it to the old
adage of ‘pigs too can fly’. Over the years, India’s remarkable
journey in the quest to make the tryst with open skies has resulted in
so many casualties, that sometimes it does seem a bit odd. The
aviation business in any case is not for the faint hearted.
Increasingly in India and even the rest of the world it is a mug's
game.
In the Hollywood film Crazy Heart about a fading country western
singer Jeff Bridges sings – It is funny how falling seems like flying.
Vijay Mallya has to fly again not just for himself but for the
sector’s good. But he has to do it on his own, without the government
playing nanny.

-MAIL TODAY, 25TH FEB'12