By 2003 Vijay Mallya had turned Kingfisher into the most premium beer in India
But his greed to make it bigger led him to scam the entire country
The crazy part? Even after the fraud, Kingfisher and IPL Team RCB are still alive
Here's what really happened behind the curtains:
But his greed to make it bigger led him to scam the entire country
The crazy part? Even after the fraud, Kingfisher and IPL Team RCB are still alive
Here's what really happened behind the curtains:
By now India has seen quite a few business tycoons go from riches to rags— one being the infamous Vijay Mallya of Kingfisher Airlines.
Mallya was born with a silver spoon in the family of Vittal Mallya.
Mallya was born with a silver spoon in the family of Vittal Mallya.
He inherited his father’s position in 1983 as the chairman of the India-based United Breweries Group (UB)— a conglomerate that included breweries & distilleries just at the age of 28!
Before becoming the chairman, Mallya launched India’s no:1 beer brand— “Kingfisher” in 1978.
Before becoming the chairman, Mallya launched India’s no:1 beer brand— “Kingfisher” in 1978.
Under his leadership, the UB group grew into a multi-national conglomerate of over 60 companies.
But Mallya aimed for the SKY.
So, he expanded his wings in the Airline sector establishing Kingfisher Airlines(KFA) in 2003 under the conglomerate.
But Mallya aimed for the SKY.
So, he expanded his wings in the Airline sector establishing Kingfisher Airlines(KFA) in 2003 under the conglomerate.
Their first commercial flight took off in 2005 and within 3 years the airlines conferred the '5-Star Airline Status’— the most recognized and prestigious award.
See, on paper, the airline was doing everything right—top notch facilities and world class inflight entertainment.
See, on paper, the airline was doing everything right—top notch facilities and world class inflight entertainment.
Yet, they failed at becoming profitable.
Let’s see how “The king of good times” got it all wrong—
▶️ Accusation of Air Deccan in 2007:
For an airline to get an international license, it should have 5 years experience in the domestic market.
Let’s see how “The king of good times” got it all wrong—
▶️ Accusation of Air Deccan in 2007:
For an airline to get an international license, it should have 5 years experience in the domestic market.
By merging with the low-cost carrier—Air Deccan, Mallya bent the rules and got access to fly internationally.
Even though KFA inherited all of Air Deccan's aircraft and market, the latter also inherited its losses.
Even though KFA inherited all of Air Deccan's aircraft and market, the latter also inherited its losses.
▶️ Entry in the foreign Airways:
With bare minimum domestic market experience, the inexperienced KFA entered the international.
They were crushed by the likes of Etihad & Emirates.
It was too difficult for the nascent KFA to break its monopoly, and it failed.
With bare minimum domestic market experience, the inexperienced KFA entered the international.
They were crushed by the likes of Etihad & Emirates.
It was too difficult for the nascent KFA to break its monopoly, and it failed.
▶️ Introducing low-budget segment:
People preferred KFA for their travel due to its premium-ness.
But when Kingfisher launched its flight in the low-budget bracket, it lost its luster.
Indigo, SpiceJet and others dominated that market and again KFA failed to thrive.
People preferred KFA for their travel due to its premium-ness.
But when Kingfisher launched its flight in the low-budget bracket, it lost its luster.
Indigo, SpiceJet and others dominated that market and again KFA failed to thrive.
▶️ High aviation fuel price:
KFA fell prey to the rising fuel prices as an aftermath of 2008.
Rising demand and competition among airlines, made it impossible for KFA to cover its fuel consumption costs.
The airlines faced lawsuits due to their failure in paying fuel bills
KFA fell prey to the rising fuel prices as an aftermath of 2008.
Rising demand and competition among airlines, made it impossible for KFA to cover its fuel consumption costs.
The airlines faced lawsuits due to their failure in paying fuel bills
In an attempt to reverse the worsening situations, Mallya secured loans from several Indian banks.
But over the next few years, he only accumulated more losses.
The airline was sinking in heavy debts and half of its aircraft were grounded and numerous employees went on strike.
But over the next few years, he only accumulated more losses.
The airline was sinking in heavy debts and half of its aircraft were grounded and numerous employees went on strike.
Not all departures get a smooth landing and hence, Mallya’s dreams and aspirations with the airlines crash landed in 2012 — when all its operations ceased.
He fled to the UK in 2016 following the charges of bank loan defaults.
He fled to the UK in 2016 following the charges of bank loan defaults.
Now, before the crash, apart from being in the business of making alcoholic beverages and running an airline, Mallya was heavily involved with sports.
He bought the IPL team — Royal Challengers Bangalore (RCB) for a whopping USD 111.6 million in 2008.
He bought the IPL team — Royal Challengers Bangalore (RCB) for a whopping USD 111.6 million in 2008.
But even after the crash landing, two known brands associated with Mallya still prevail — RCB and the Kingfisher beer.
And how’s that? Kyuki—
And how’s that? Kyuki—
Vijay Mallya had major stakes in 2 companies. i.e United Breweries and his flagship company United Spirits.
▶️ United Breweries Ltd (UBL):
In June 2021, Heineken N.V. bought out Mallya's 15% stake in United Breweries Limited for â‚ą5,825 crores from the Debt Recovery Tribunal.
▶️ United Breweries Ltd (UBL):
In June 2021, Heineken N.V. bought out Mallya's 15% stake in United Breweries Limited for â‚ą5,825 crores from the Debt Recovery Tribunal.
With this, Heineken's stake in the company increased to 61.5%.
Hence, the company now controls the Heineken production in India along with Kingfisher Premium, Strong, Ultra in the same portfolio.
Hence, the company now controls the Heineken production in India along with Kingfisher Premium, Strong, Ultra in the same portfolio.
▶️United Spirits Ltd (USL):
Mallya sold his controlling stake in USL to Diageo— global leader in beverage alcohol.
USL is now a subsidiary of Diageo PLC, with ownership of 55.94% in the company.
It controls the spirits and wine production in India.
Mallya sold his controlling stake in USL to Diageo— global leader in beverage alcohol.
USL is now a subsidiary of Diageo PLC, with ownership of 55.94% in the company.
It controls the spirits and wine production in India.
USL has an overall portfolio of 80 brands including premium ones such as Johnnie Walker, Black & White, McDowell’s No.1 and Royal Challenge—after which RCB was named.
After the acquisition, Diageo-USL is now the owner of RCB.
After the acquisition, Diageo-USL is now the owner of RCB.
Last year, USL clocked revenue of Rs.9712 Cr. while UBL clocked Rs.5838 Cr.
In fact the two companies, United Spirits Ltd and United Breweries Ltd. obtain the 1st and the 2nd spots respectively as the “largest producers of alcohol” in India.
In fact the two companies, United Spirits Ltd and United Breweries Ltd. obtain the 1st and the 2nd spots respectively as the “largest producers of alcohol” in India.
The reason Vijay Mallya built Kingfisher airline was that he didn't want to sell a bottle, he wanted to sell a lifestyle.
Everyone who traveled through Kingfisher airlines got a taste of that lifestyle that Kingfisher represented.
Everyone who traveled through Kingfisher airlines got a taste of that lifestyle that Kingfisher represented.
Not just that, having a brand name on an aeroplane builds high levels of aspirational value.
We have to give him credit for being a genius in building aspirational brands by tapping into the human psyche.
And showing India how it is to live a superior life.
We have to give him credit for being a genius in building aspirational brands by tapping into the human psyche.
And showing India how it is to live a superior life.
It's just that an airline as a branding exercise wasn't great for costs.
“The liquor baron” chose a tough business for selling lifestyle and ended up digging his own grave.
“The liquor baron” chose a tough business for selling lifestyle and ended up digging his own grave.
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