Men who lost their empires : Part II

  1. Vijay Mallya


From once having the world at his feet to then falling at the country’s feet in a bid to avoid extradition, the “King of Good Times” has witnessed life in full circle. Vijay Mallya’s first foray into the world of business was when he was given chairmanship of the United Breweries Group upon the death of his father Vittal Mallya. The 27-year-old Vijay Mallya inherited a company that owned a liquor manufacturing plant, a brewery and a distillery; but also controlled other businesses such as polymer, battery, foods and pharma. Being hardworking and ambitious at that time he expanded his footprint into engineering, newspaper and chemical businesses. However, he soon realised that the liquor business had the most potential and began focussing his time and resources into that business. By March 2005 United Breweries Group was the world’s second largest liquor maker. At the height of his success and fame, the flamboyant business magnate along with his Dutch partner purchased a UK based Formula 1 racing team and named it Force India. Mr Mallya’s tentacles even spread as far as cricket when he purchased the franchise of the Indian Premier League’s (IPL) Royal Challengers Bangalore team in its inaugural auction held in Mumbai in Feb 2008. His bid for a team of $ 111.6 million was second only to Mukesh Ambani’s team. At one point he was definitely one of the most well-known faces of the Indian corporate sector and was even declared the 40th richest man in the world by Forbes magazine in 2007.

His downfall came from an unwise decision to enter the highly competitive and capital intensive airline business in 2005 on the auspicious day of his son’s 18th birthday. Initially, the airline seemed to be ticking the right boxes with team Mallya providing top of the line luxuries and amenities with class-leading services. He even personally picked his flight attendants, all of whom had to be presentable and attractive. Soon, Kingfisher Airlines was India’s second largest in terms of the number of passengers with more than 25% domestic travellers swearing their allegiance to the brand Mallya; however, being a capital intensive industry, it was still to turn a profit and was continually incurring more and more debt. In 2007 with the intention of starting international flights (to begin flying international routes an airline company must have been in operation for at least 5 years) he purchased the ailing Air Deccan which was at that time a four-year-old company; the purchase entailed even more debt. This massive amount of debt coincided with rising crude oil prices which reached $140/barrel and a depreciating rupee. Soon, the toxic combination of high debt, rising crude prices, falling rupee and the recessionary conditions that hit the market proved too much for the airline to handle. Not long after, the cash strapped Kingfisher Airlines stopped payment of salaries to its staff as well as vendor and suppliers and was witness to strikes and protests. Finally, after dragging its feet for a few more years, the beleaguered airline saw its license being cancelled and closed its doors for business in late 2012. Being confident of his plan when things had not hit rock bottom, Vijay Mallya had given a personal guarantee for his company’s borrowings, but when Kingfisher Airlines could not pay back its loaned amount, lenders chased the promoter for repayment, which Mallya could not pay back. For a few years, Vijay Mallya managed to hold off paying the banks. Being a member of the Rajya Sabha and using his political clout did help. But finally, after a change in government in 2014 and insurmountable pressure on him to make the repayment; Vijay Mallya fled to London on March 2nd 2016 in order to take refuge and escape being jailed as an economic offender and a wilful defaulter. Indian authorities have been trying to extradite him since then and with general elections coming up, the issue has become politicised. Just a month back, a magistrate court in the UK declared him eligible to be extradited back to India; but once again he intends to appeal this decision and has bought himself a little more time in the process. The entire story of this Rs 9000 crore defaulter culminated with him being declared as India’s first “fugitive economic offender” by a Mumbai court on 5th January 2019. The act came into existence just last year when President Ram Nath Kovind signed off on it on August 5th 2018 giving Vijay Mallya the dubious distinction of being the first person in India to be convicted under it. Now, the government can confiscate the properties that are in Vijay Mallya’s personal name in their effort to recover the sum of money due from him.



More examples of men who have run their run their empires into the ground include Anil Sharma, Chairman of the Amrapali group, once the poster boy of the real estate sector in Northern India. From executing the construction of some of the biggest projects in the country, to owning 5 star hotels and malls, to having cricket captain Mahendra Singh Dhoni as his brand ambassador to foraying into fields of FMCG, hospitality and entertainment to even having a political career; he is now in the news for not handing over 100’s of people their rightful homes. The Supreme Court has frozen his bank accounts and properties and those of 40 sister companies. Several complaints of fraud and cheque bouncing have also been registered against him.

Another real estate investment company and builder, Unitech, which claimed to be India’s largest real estate builder at one time sees its founder in trouble. Ramesh Chandra, worth over 11 billion $ at his peak in 2007, is yet to regain his billionaire status. The company fell into trouble after it got embroiled in the 2G telecom corruption scandal that led to his younger son Sanjay being jailed. From an all-time high of Rs 547 per share, today Unitech’s share price is just Rs 1.95 per share.

Yet another example is Steel and Power sector tycoon Brij Bhushan Singal and his sons. From once having a sprawling empire and a billion $ steel making company Bhushan Steel and Bhushan Power – that was a supplier to the biggest names in the country and the world, his empire today is but a shadow of its former self. It can be attributed to bad business decisions.

Another very interesting way in which one might lose an empire through personal reasons is the example of none other than the richest man in the world – Amazon’s very own Jeff Bezos, who is at a risk of losing half his net worth by divorcing his wife of 25 years, MacKenzie Bezos. Bezos was brazenly believed to be cheating on his wife with his mistress Lauren Sanchez and is at risk of depleting his personal wealth of a whopping 125 billion $ thereby putting his entire empire at risk.



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