Vijay Mallya faces non-bailable warrant in Hyderabad court

1)Vijay Mallyas journey from a businessman to a fraudster

Here is the breakdown of Mallya's journey from a businessman to a wilful defaulter.

1) Mallya owes nearly Rs 7,000 crore to bankers. Here's how it stacks up

Rs 1,600 crore - SBI
Rs 800 crore - PNB
Rs 800 crore - IDBI
Rs 650 crore - Bank of India
Rs 550 crore - Bank of Baroda
Rs 430 crore - United Bank of India
Rs 410 crore - Central Bank of India
Rs 320 crore - UCO Bank

Rs 310 crore - Corporation Bank

Rs 150 crore - State Bank of Mysore
Rs 140 crore - Indian Overseas Bank
Rs 90 crore - Federal Bank
Rs 60 crore - Punjab & Sind Bank
Rs 50 crore - Axis Bank
He, however, claims that out of these 7000 crores, Rs 1,200 crore have been
recovered by these banks.

2. A look at his holdings in his companies

33% in United Breweries, which is worth Rs 7,000 crore. But more than half of the
stake is pledged.

22% interest in Mangalore Chemicals & Fertilisers, which is worth Rs 140 crore. Onethird of the shares are pledged. 52%of UB Holdings, a shell company, which has some
real estate in Bangalore and other places, but the rentals have already been pledged.
Under 1% stake in Bayer Corp Science, but Mallya remains its chairman.

3. How Mallya became Mallya

1983 | After his father's death, Mallya becomes UB group chairman at 28.
1999 | Launches Kingfisher Strong, which changes beer consumption nationally, is still
the largest selling brand.
2002 | Nominated to Rajya Sabha.

4. Mallya's shopping list

2005 | Launches Kingfisher Airlines (KFA). Buys Shaw Wallace, gaining whisky brands
such as Royal Challenge

2006 | Buys Herbertsons, makers of Bagpiper whisky and Romanov vodka.

2007 | Buys F1 team Spyker, renames it Force India. Acquires Air Deccan. Buys British
whisky maker Whyte and Mackay for 595m.
2008 | Buys IPL team Royal Challengers Bangalore for $111.6m. UB City comes up in
Bangalore.

5. And, how it got ruined

2012 | KFA staff strike work for nonpayment of salaries, income-tax dept freezes KFA
accounts, airline grounds flights. In Oct, govt suspends KFA licence. British alcoholic
beverages firm Diageo agrees to buy majority stake in United Spirits
2013 | Diageo acquires 27% stake in USL for Rs 6,500 crore, but KFA lenders do not
get any funds.
2014 | United Bank identifies United Breweries Holdings as wilful defaulter.
2015 | Diageo asks Mallya to step down as chairman of the Indian liquor firm but he
refuses.
2016 | Banks move debt recovery tribunal, which restrains Mallya from accessing Rs
515 crore he was to receive from Diageo as settlement after agreeing to quit.

6. The pain of Kingfisher's employees

Over 1,500 staffers, still on the firm's payrolls after it stopped operation, not paid? On
March 5, employees write an open letter to Mallya, saying his 'heart is impure' and he
has blood on his hands. They seek PM Narendra Modi's help to get their dues.

7. Despite whatever he says, Mallya isn't a broke bloke

Mallya owns homes in Trump Towers, New York City, and in San Francisco. Game resort
in South Africa. A beachfront villa in Goa. He also has a fleet of over 200 luxury
vintage cars, a 95m "mega yacht" with a helipad, a Gulfstream private jet.
2)Sebi clampdown busts over Rs 15,000-cr worth tax evasion
In a major clampdown, regulator Sebi has debarred over 1,000 entities from the
capital markets after they were found to be misusing stock exchange platforms for tax
evasion to the tune of more than Rs 15,000 crore.
Sebi has also suspended trading in shares of as many as 167 companies, while the
regulator has written to the Income Tax Department in nearly 100 cases where more

than 1,800 entities are suspected to have traded in shares valued beyond their
disclosed income.
Such activities were mostly happening through shares of shell companies or thinlytraded penny stocks. There has not been any instance of a blue-chip stock being used
for generating bogus profits or losses to evade taxes.
Senior officials also said that Sebi has managed to create some kind of fear psychosis
through its surveillance measures and enforcement actions among the manipulators
and fraudsters and therefore this modus operandi of tax evasion through stock
exchange platforms may soon be out of favour.
When contacted, Sebis Whole Time Member Rajeev Kumar Agarwal told PTI, Sebi has
demonstrated by its enforcement actions that anyone misusing the stock market
platform for tax evasion will not be spared.
While Agarwal did not get into details, an analysis of the enforcement and surveillance
measures taken by Sebi since August 2014 shows that 167 stocks have been
completely suspended for trading and trading has been restricted to a lower price
band of 2 per cent for 123 others.

Sources said that Sebi has also referred to the Income Tax Department all those cases
involving 11 stocks wherein the regulator has passed interim orders against 1,013
entities.
Besides, Sebi has written to Income Tax Department with details of 1,854 entities who
have provided exit to preferential allottees for trade value of nearly Rs 3,900 crore.
These entities are suspected to have traded beyond their disclosed income limits.
As a preventive measure to check the abnormal price movement on low-cap stocks,
leading stock exchange BSE has also introduced stringent weekly, monthly, quarterly
and yearly price bands for the stocks exclusively listed on its platform.
The modus operandi in such cases typically involved stock market dealings aimed at
evading long-term capital gains tax (LTCG) and showing the source of income as
legitimate from stock markets. Besides, bogus losses are also created through stock
market dealings to offset the same against capital gains.
Altogether, the amount of LTCG involved in the companies, where Sebi has issued
orders to bar them from securities markets and trading has been suspended, is more
than Rs 15,000 crore, the officials said.
In one of its orders in August last year, Sebi debarred 59 entities for executing
suspicious reversal trades in stock options segment. These 59 entities, through such

trades, were able to book artificial profit of about Rs 410 crore and an artificial loss to
the tune of Rs 338 crore.
In another case order last month, Sebi restrained 22 trading members from securities
markets, except as stock brokers for their existing clients in cash segment.
Sebis probe found that these brokers facilitated reversal transactions for their clients
which resulted into artificial profit for one group of clients and artificial loss for another
3)New regime in oil and gas exploration
For one, it has prospectively replaced the existing profit-sharing arrangement in
hydrocarbon exploration with a revenue-sharing formula.
And in another, it put in place a transparent single licence and policy framework for
oil, gas and coal-bed methane exploration in the country. At present there is a
different policy for each form of hydrocarbons.
The revenue-sharing formula may help prevent future disputes over pricing and cost
recovery of the kind the government has been embroiled in with Reliance Industries
Ltd (RIL).
The government also freed gas pricing from the new blocks and existing discoveries
which are yet to commence production. However, to protect user industries from any

unexpected spikes in gas prices, the government is imposing a price cap linked to the
opportunity cost of imported fuels.
These changes are part of the overhaul undertaken by the Union cabinet to incentivise
oil and gas exploration by operating a transparent policy regime, improve energy
security by reducing dependence on imports and minimizing government intervention
consistent with the strategy of the National Democratic Alliance (NDA) in improving
ease of doing business.
Briefing reporters after the cabinet meeting approved the Hydrocarbon Exploration
Licensing Policy (Help), oil minister Dharmendra Pradhan said the new contractual
regime for energy exploration is in line with the principle of minimum government
and maximum governance.
The new hydrocarbon licensing regime allows pricing and marketing freedom for all
forms of hydrocarbons to be produced from a field and for earnings to be shared with
the government under an upfront revenue sharing formula.
This replaces the current system of allowing producers to first recover most of their
costs and then start sharing revenues with the government.
The government adopted the revenue share model after the Comptroller and Auditor
General of India (CAG) suggested that the cost-recovery model tempts companies to
frontload spending and delay paying the state its share of profits.

Pradhan said the existing regime has led to disputes. The governments move to
disallow cost recovery by RIL from the KG D6 field revenue after the companys gas
output decline led to a dispute that is now in arbitration.
According to the petroleum ministry, the move to a revenue share will minimize
government intervention. This is because until now, at every stage, the government
has had to sign off on the costs claimed by the developer. This often triggered
disputes and delay in the project.
Blocks are auctioned at present under the existing new exploration licensing policy
(Nelp) to the bidder who offers to recover the least amount of cost upfront and offers
a higher share of revenue to the government.
In the future, blocks will be licensed out to explorers on the basis of who offers the
highest share of upfront revenue to the government.
The next round of auctions will happen under the new system when the government
finds market conditions favourable.
Under the new regime, the government will not be concerned with the cost incurred
and will receive a share of the gross revenue from the sale of oil, gas etc. said an
official statement, adding that the idea was to improve ease of doing business.
While the new licensing policy simplifies the exploration process for future auctions of
blocks, the new pricing formula for difficult-to-extract gas will benefit companies such

as Oil and Natural Gas Corp. Ltd, RIL and Gujarat State Petroleum Corporation that
have deep sea discoveries in already licensed blocks which are yet to be brought into
production.
The new formula will encourage them to develop their deep sea discoveries and
realize a price higher than what gas from other fields fetches now ($3.8 per unit).
Todays decision is expected to improve the viability of some of the discoveries
already made in difficult geological areas and also would lead to monetization of
future discoveries, Pradhan said.
The idea is to incentivise new investments into the gas economy and boost supply and
competition, which will eventually lead to lower gas prices. Till then, the ceiling price
to be determined by landed cost of alternative fuels like fuel oil, liquefied natural gas
and naphtha, will protect user industries such as power, steel and fertilizers.
BP Plc., which has a 30% stake in 23 oil and gas blocks in India, welcomed the move,
saying these forward-looking initiatives will give a much needed impetus to the oil and
gas industry.
It demonstrates the governments firm intent to transform the oil and gas sector and
enhance import substitution. We believe this should help unlock the development of
existing gas discoveries, and encourage additional exploration. It will also lead to the
development of a competitive gas market in the country, said BP in a statement.

The company also said the decision to deregulate gas prices could unlock production
from new developments in deep, ultra-deep water and high-pressure, hightemperature areas.
An RIL executive, who did not wished to be named, welcomed the move and said the
decision paves the way for a level-playing field between domestic and imported gas.
Over a period of time, this concession should be extended to producing fields too, said
the person.
Since the new pricing regime for deep-sea gas applies to undeveloped fields, gas from
RILs KG D6 field in the Krishna Godavari basin which went on production in 2009 will
not benefit from the decision.
The price for deep sea gas would be determined by the weighted average of
imported coal, LNG and naphtha, said Pradhan. This ceiling price will be revised
every six months. With this, as much as 6.75 trillion cubic feet of reserves, capable of
producing 35 million standard cubic metres of gas per day (mmscmd) for 15 years,
would get monetized, said the minister. These reserves are valued at Rs.1.8 trillion, he
said.
The intent to introduce a new pricing formula was announced by finance minister Arun
Jaitley in his 2016-17 budget speech.

At present, natural gas price is determined by taking into account the average of
prices in gas-surplus countries such as the US, Canada and Russia.
The proposed formula is market-efficient. By allowing competition to set prices it
offers early entrants the most incentive, while the variable price cap will attract more
exploration when global fuel prices go up, said Kameswara Rao, leader of energy
utilities and mining at PricewaterhouseCoopers in India.
Help will also allow energy companies to produce whatever form of hydrocarbon is
available from a licensed blockcoal bed methane, shale gas/oil, tight gas and gas
hydrateswithout seeking separate permission for producing each of the fuels.
Also, under the new regime, there will not be yearly auction of a cluster of identified
blocks. Instead, investors can access data about all the blocks available and would be
encouraged to bid at any time of their choice under the open acreage principle.
To help energy firms operating small- and medium-sized fields and for which the lease
is to expire before full utilization of production rights, the cabinet said their tenure
may be extended under revised terms.
This policy will cover 28 fields. This will help developers make fresh investments in
those fields and improve oil recovery.
During the extended period, the government will claim 10% more share of revenue
than what is applicable under the existing agreement

4) The debt troubles of Jindal Steel and Power

Jindal Steel and Power Ltds (JSPLs) equity investors appear unperturbed by the
companys debt getting a default rating, if the share price is a reliable indicator. Then
again, its share is down by 65% from a year ago

Crisil Ltd has rated JSPLs debt, all of Rs.32,638 crore, as default, citing delayed
payment of interest on term loans due to weakened liquidity. Falling steel price
realizations are affecting margins and this tough period is coinciding with obligations
to repay debt. Delays in the companys plans to raise funds by selling assets,
transferring certain assets to joint ventures and refinancing debt have not moved
ahead. If JSPLs steel business is under pressure, then its power business too is
suffering from demand and price volatility in the merchant market and lack of raw
material integration
Franklin Templeton Asset Management (India) Pvt. Ltd has sold its entire holding of
Jindal Steel and Power Ltd (JSPL) debt securities at a loss after the company had its
ratings downgraded by credit assessor Crisil Ltd. JSPL securities have been sold off

completely from schemes in two tranches on 29 February and 10 March 2016.Six of

its schemes had 2-7% of their corpuses in JSPL debt as of the end of January.