Vijay Mallya is everybody’s favourite punching bag. The focus is always on his seemingly extravagant ways of squandering wealth and indulging in unrelated diversification that has led him to the brink of bankruptcy. According to Forbes, Vijay Mallya’s net worth has plunged from USD 1.1 billion to USD 800 million (about Rs 4,285 crore). His position in the rankings has also plunged from 49 to 73.
The point is that there are some things that Vijay Mallya did right to become a billionaire in the first place and some things that he did wrong to lose that coveted place. Lets see what those are and how Vijay Mallya can turn the tables:
Vittal Mallya: The True Visionary:
United Breweries Ltd was formed in 1915 by a group of Englishmen. Vittal Mallya (Vijay’s father) took over the reins of United Breweries in 1947 at the tender age of 22. Vittal Mallya displayed amazing business acumen by buying over McDowells (now known as United Spirits) in 1951 and expanding to the liquor business. He also saw huge potential in the manufacture of Indian substitutes of foreign liquor (“IMFL” Indian Made Foreign Liquor). McDowell is now the market leader in the sector.
Ironically, Morarji Desai of the Janata Party who imposed prohibition was the single reason responsible for catapulting Vittal Mallya into the super-big league.
Thanks to Morarji Desai’s prohibition movement, breweries across the Country were closing down and selling at bargain basement prices. Vittal Mallya had the vision to see that the prohibition policy would not last and he snapped up all the breweries that were on sale. In one shot, United Breweries became the biggest brewery in the Country.
Vijay Mallya’s Contribution To UB’s Fortunes:
When Vittal Mallya died in 1983, Vijay Mallya was only 28 years old. In 1983, the sales volume of the UB Spirits division was approximately 2.85 million cases and UB’s beer business trailed behind that of Golden Eagle from Mohan Meakins. Today, the UB Group is one of India’s largest conglomerates with annual sales of over US$ 4 billion and a market capitalization of approximately US$ 12 billion. It is the largest Indian manufacturer of beverage alcohol (beer and spirits).
Credit for the quantum jump in the UB Group’s fortunes has to go to Vijay Mallya.
Vijay Mallya also displayed great foresight in 1990 when, following the Government’s liberalised economic policies, he decided that the UB Group would only retain interests in businesses that were globally competitive and which did not depend upon fiscal tariff protection. He also decided to focus on areas of core competence and transformed the vastly diversified UB conglomerate into a handful of key operating businesses. He sold off the Berger Paints & other businesses at huge profit.
Vijay Mallya’s second big move was in 2007 when United Spirits Ltd acquired 100% of premium scotch distillers Whyte & Mackay Inc, a USA based maker of specialty vodkas. This was a bold move because Vijay Mallya was pitted against the giants of the Industry and the stakes were large.
During Vijay Mallya’s regime, the UB Group’s Brewing Division assumed market leadership with a national market share in excess of 48%. The UB Group today controls nearly 60% of the total manufacturing capacity for beer in India. The Kingfisher brand is now sold in over 50 countries worldwide.
Shareholders’ Delighted By Multibagger Gains:
If you ask the shareholders of United Breweries and United Spirits, they are a very happy lot. Rakesh Jhunjhunwala was one of the early investors in United Spirits (then McDowell) and he made huge multibagger gains from that stock. Utpal Sheth was another visionary stock picker who spotted the early investor advantage and made a huge packet from Vijay Mallya’s companies. Even as of today, despite all the troubles that the group is facing, if you go back 10 years (1.10.2002), United Breweries has given multibagger gains of 6100% (61 times) while United Spirits has given gains of 2700% (27 times). That is probably more than what any Tata, Birla or Ambani company has given its shareholders.
What Led To The Downfall:
Sadly, in mid-2000s, Vijay Mallya broke his own decision to remain focused on his core business and diversified into the aviation sector. The aviation sector has never, anywhere in the World, made serious money. If you look at the giant’s like PanAm, United Airlines, Lufthansa, British Airways, they have always lost money. Even low cost airlines like Ryan Air and Air Asia are barely making ends meet. The international experience is that it is a business that guzzles up huge amounts of cash and doesn’t offer much in return even if you run a very tight ship. If you are extravagant in running the business, you are doomed. India was no exception and Kingfisher Airlines began to lose serious money. The worst cut came when Vijay Mallya decided that Capt. C. Y. Gopinath’s Air Deccan should be merged with Kingfisher Airlines. That was a millstone from which Kingfisher never recovered.
To make matters worse, at the same time, Vijay Mallya also got obsessed with IPL cricket and spent huge sums in purchase of the Royal Challengers, a motley team of cricketers. Formula One also caught his attention and he wanted to have the privilege to be the “first Indian” to own a Formula One Team, no matter what the cost.
The deadly cocktail of Kingfisher Airlines, IPL Cricket and Formula One was the curse which broke Vijay Mallya’s back. These worthless businesses just gobbled up gigantic sums of money and never gave anything back in return except for the foolish embellishment of “King of Good Times“.
What Vijay Mallya Should Do Now:
What Vijay Mallya should do now is to quickly turn the clock back. The FDI in aviation is a god-sent opportunity to get rid of Kingfisher Airlines. Vijay Mallya should palm off Kingfisher Airlines to Emirates or whoever is willing to buy it at whatever is the best price that he can extract from them. Even the accursed IPL cricket team Royal Challengers and Formula One Team should be sold off at the earliest available opportunity.
Thereafter, once he has got rid of these millstones, Vijay Mallya should just put his head down, roll up his sleeves, and focus on the beer and spirits business. These businesses are huge cash generators and there is a massive unlimited market for these products worldwide.
If he does that, Vijay Mallya will zoom back into the Billionaire’s list and the satisfaction that this will provide will surely be far superior to the sobriquet of “King of Good Times” that he is currently craving for!
It is too late. VJM is bankrupt as he has personally guaranteed more than he is worth. I told him not to invest in an airline but to stick to beer/alcohol business. He did not listen to me, an old friend and employee!
Maybe he’s become a teetotaler and no longer enjoys the liquor business.
He can turn a profit on the f1 team. Recently the UK has been giving funds to newer engine designs. He can test them. Or similar.
The Aviation business can be turned around. A 15, 000 investment from some can do it.
VijAY MALIAH Dec 18 1955 a very courageous man who could accommodate sudden call of emergency seldom knowing what is word “ fear” means. A good start of fateline from bottom of palm print indicating a a persuasive individuality. An upper spatulate indicating a an energetic hand with sun line starting from fateline at 25 26 ruined at 35,An enmity line from lower Mars cutting through at 35-36. Vijay Mallya is not driven by a need to amass money. That would bore him. He is ambitious certainly, but the shape of his Jupiter finger tells us that he has an idealistic streak. He would be choosy about the businesses he would enter. He would want to do things he likes and enjoys. He wants life to be colourful and interesting. Sure, he wants to be known for his talent, but not as a money making businessman. The shape of his Apollo finger clearly tells us that he has talent, and his Saturn phalanges reveal that he is a thinker with superior analytical ability. His Apollo tells us of his risk taking ability.
Island on any part of the line of Sun which indicates destruction to position, success promised and public scandal. The first one it signifies that he was interned his fathers business at early age. The line of destiny was so thick and dark in color at the age of 26. At this movement a thin line of Sun rising from the fate line. This alone is an extraordinary indication of his unusual success and fame. This was the boom period of his life. His line of Head is leaning towards the Mount of Moon which generally indicates that he would become gambler, involve in betting and risky speculations by nature. At the termination of the Sun line there is an island which indicate his down fall of the brilliant career after the age of 42, he will be suffering from this downfall for some years. Yes its true in this case Mallya became the Chairman of United Breweries Group in 1983 at the age of 28, following his father’s death. Since then, the group has grown into a multi-national conglomerate of over 60 companies, with an annual turnover which increased by 64% over 15 years to US$11 billion. He will come out of this difficulty eventually after 63 at the vibration of Mars age. What Vijay Mallya should do now is to quickly turn the clock back. The FDI in aviation is a god-sent opportunity to get rid of Kingfisher Airlines. Vijay Mallya should palm off Kingfisher Airlines to Emirates or whoever is willing to buy it at whatever is the best price that he can extract from them. Even the accursed IPL cricket team Royal Challengers and Formula One Team should be sold off at the earliest available opportunity.
Thereafter, once he has got rid of these millstones, Vijay Mallya should just put his head down, roll up his sleeves, and focus on the beer and spirits business. These businesses are huge cash generators and there is a massive unlimited market for these products worldwide.
If he does that, Vijay Mallya will zoom back into the Billionaire’s list and the satisfaction that this will provide will surely be far superior to the sobriquet of “King of Good Times” that he is currently craving for!
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As he crosses age 60 the influence of Saturn slowing down and restricting mars nature bringing heavy burden and as a general rule ,a great amount of responsibility. He will come out of 2016 number 9 Mars vibration soon.
Vijay Mallya may hear news of the death of a close relative or family member. Vijay Mallya is advised to take proper care of yourself as there are chances of suffering from diseases. There is a loss of wealth, loss of confidence, fruitless and mental worries. People jealousy for Vijay Mallya can cause problems. Chances of financial loss due to theft are also there. Vijay Mallya may also indulge in bad company and bad habits.