The loneliness of Vijay Mallya

The time has come for Vijay Mallya to extricate himself from the mess
that he finds himself in with a bold new idea. Perceptually, his
larger than life persona has trapped him. He is seen as an idol of the
cave. The individual with all his glitzy trappings suffering from an
acute image disorder. And he is not apologetic about it. Never has
been. At the height of his flashy and flamboyant lifestyle, he would
be quick on the trigger and tell you conspiratorially that he is a
rich and wealthy man. Nobody ever doubted that. I guess he never made
bones about the fact that – I have it and I will flaunt it. Wearing
his rich and famous lifestyle practically on his sleeve as a badge.
Unlike any other industrialist in India. The majority choosing to
continue with the last vestiges of the old socialist license raj order
where it wasn’t a good idea to flaunt your wealth. In fact, it wasn’t
a good idea to make profits.

If you did, you didn’t make noise about it. But all that changed with
the onset of the unfettering of the economy and dismantling of the
license permit raj. Industrialists like Mallya turned the old order on
its head, they were the brave new face of the modern Indian
industrialist. Bulge bracket, cash rich, splurging on extremely high
maintenance lifestyles. Adding to the mystique of being Vijay Mallya
was a fleet of fancy cars, expensive yachts, luxury jets and even a
Boeing aircraft. Throw in an IPL team – Royal Challengers, a Formula
One outfit Force India (now only partly owned because he hawked 42.5
per cent to Subrata Roy Sahara), purchasing the Sword of Tipu Sultan
at an auction in London – and the imagery and persona of big business.
From Kingfisher Villa in Goa, to Kingfisher calendar girls to
Kingfisher horse racing, Mallya was synonymous with wealth and lux.

So far so good. Deeply religious and a devotee of Lord Balaji, Mallya
made all the right moves as a businessman. Not many had given him a
chance when as a youth he was racing cars and walking around town with
arm candy. But he proved how shrewd and calculating he was, when he
knocked over all the competition in liquor and beverages sector.
Systematically he mowed down all opposition to emerge as the
undisputed badshah of liquor. Known as the liquor baron, he took a
calculated risk by going overseas and pouching Whyte & McKay. But
every businessman, however clever, always makes one mistake. Mallya’s
bugbear proved to be his dalliance with the aviation sector. His naked
obsession to best first mover Naresh Goyal of Jet Airways has in many
ways proved to be his bête noire. Aviation as is well known is a mug’s
game, a cash burning, cash guzzling and seriously hurting game. An
affliction that you cannot shake off. More so, if you are operating in
a high crude pricing environment.

The obsession to best Goyal’s Jet was not limited to running a better
airline alone, it meant that serving better cuisine, giving more leg
space, hiring better looking stewardesses, running wide bodied
aircraft and generally giving the passenger a spiffy Kingfisher
experience. Can’t fault him on that. The question is was this business
model sustainable? No, not all. Yes, he did provide the Kingfisher
experience to all the passengers, but when finances go into a
tailspin, then, it is a deathly spiral that one cannot come out of in
a hurry. Between Formula One and IPL, Mallya doesn’t have the time,
inclination or bandwidth to focus on the ills that plague his airline
business. Sleight of hand business acumen cannot work. Professionals
cannot get a handle on a raging crisis the way an promoter can.
However, for that the promoter needs to be in station. When VJM worked
his way around divesting companies and brands, acquired liquor brands
and gathered mass, VJM was the poster boy of business. It must be
extremely galling for Mallya to suffer these indignities. Known for
his hospitality and large heartedness, it must be hurting that his
airline is in such disarray. Not being able to pay salaries and meet
other statutory obligations equally must be affecting his psyche.

That is why it is imperative for VJM to show intent and commitment. If
he has to remain a responsible airline maintain a schedule integrity,
he will have to come up with jack in the box. Two of his listed group
companies – United Breweries and United Spirits Ltd – have seen a
spurt in their stock prices. At the same time, a much smaller company
MCF is reportedly on the block with a handful of suitors. The way
forward will have to be sale of equity, perhaps even control thereby
charging control premium and as such walk the talk. Putting his money
where his mouth is. Mallya is a proud man and I reckon the time has
come for him to decide whether he should keep his airline afloat. He
cannot wait for the Government to play nanny to him. PSU banks will
only throw him a lifeline if he shows similar commitment. To his
credit he has invested Rs 980 crore or thereabouts in the last 12
months, but he needs to now go the extra mile.

Both UB and USL shares are flying, something is obviously afoot. D
Street normally gets wind of it first. A deal with global behemoths
like Diageo or William Grant may well alleviate his present woes. What
analysts aver is that Mallya essentially requires a booster shot of Rs
2000 crore in phase 1. This way he can meet statutory obligations,
vendor payments and wage bill commitments. If he can pull this off,
then in phase 2, he can actually benefit from the government’s FDI in
civil aviation policy which is in the works. If the govt greenlights
49 per cent FDI then a British Airways or Etihad Airways can swoop
down on him. This will bail him out. Mallya may want deliverance from
this extremely expensive mistake. A mistake that his changed his life
and perception of him as a businessman.

Can he bounce back? The odds are on him succeeding, but with a little
help from the sale of equity in his liquor businesses.