CASE STUDY – 6

TITLE: Corporate Failure ( Money laundering)

Brief introduction of case:

India's one of the most highly profiled airlines- Kingfisher, has turned into

shambles whereas in the market scenario, other competitors of the

Kingfisher are flying high.

Kingfisher Airlines was established in the year 2003 and

owned by the United Breweries Group which is based in Bengaluru. It came

into the aviation market at a time when the low-cost airlines had galvanized the

market and made air-travel available to every Indian.

The promoter of the airline, India’s biggest liquor tycoon Mr. Vijay Mallya was

well known for his vibrancy, quality and style. He upholds the legacy of his

family business at the age of 28 and his luxurious lifestyle gave him the

corporate fame at quite an early age. He used his popularity to uplift United

Breweries Groups brand and

invented “King of all times” slogan for the beer.

Millionaire Vijay Mallya on Tuesday was granted bail by London court hours

after his arrest by the Scotland Yard, acting on an extradition request from
India. Extradition proceedings against Mallya have now started. Mallya, who

insouciantly referred to Tuesday’s happenings in the UK as “usual Indian

media hype" on Twitter, faces several cases in India, where his companies have

defaulted on loans of around Rs9,000 crore from Indian banks.

Major and minor facts of case:

 In July 2015, the Central Bureau of Investigation (CBI) registers a case

in the loan default case based on a complaint by IDBI Bank.

 In the month of January, CBI charged Mallya with fraud and criminal

conspiracy and sought judicial custody of former IDBI managers and

Kingfisher Airlines officials in connection with dues of around Rs950

crore.

 A CBI court has issued a non-bailable warrant against Mallya in relation

to the loan default case.

 The Enforcement Directorate registered a money-laundering case

against Mallya and Kingfisher Airlines chief financial officer A.

Raghunathan in connection with the IDBI Bank loan default case in

March 2016.

 In March 2016, retirement fund body Employees’ Provident Fund

Organization (EPFO) formed an enforcement squad to investigate

 anomalies and irregularities in provident fund dues to Kingfisher

Airlines employees.

 GMR Hyderabad International Airport Ltd filed a case against Mallya

and former Kingfisher Airlines CFO Raghunathan after cheques issued

by the airline for payment of fees for using airport facilities bounced.

 In July 2016, a Mumbai metropolitan court issued a non bailable

warrant against Mallya in a case of cheque bouncing filed by the

Airports Authority of India (AAI).

 On 16 March 2016, a consortium of banks led by SBI moved the Supreme

Court to restrain Mallya from leaving the country.

 The Securities and Exchange Board of India (Sebi) in January barred

Mallya and six former executives of United Spirits from accessing the

securities market for alleged violations of the listing agreement,

diversion of funds and fraud.

Suggestions /recommendations:

 The Air India should make effective the practice of evaluating the

employee’s performance by their customers.

 The Air India should make effective the practice of evaluating the

employee’s performance by their customers.

 Public sector airlines (Air India) should motivate the employees with

potential, by giving new roles in the organization.

 The Kingfisher Airlines should emphasise on the job rotation as a tool to

develop professional growth ofthe employees.

 It is suggested to Air India to know that the employees consider , the

rewards and incentives as motivators for better performance.

 The Air India and Kingfisher airlines should think of providing adequate

training so as to see high productivity in employees.

 There is a need to make the appraisal system in Kingfisher airlines more

open, participative and development-oriented.

Answers :

1. How do you consider the journey of King Fisher ?

I consider the journey of king fisher following the information below

 Kingfisher airlines achieved success in gaining customer

satisfaction by offering the great and comfortable flying experience

to its passengers

 . However, in the Indian aviation sector, Kingfisher Airlines had a

short but lasting impression.

 By the end of 2011, Kingfisher Airlines suffered a huge financial

crisis. Kingfisher Airlines, UB Holdings Ltd. was provided loan by

many private and public sector banks in India, considering the

reputation of its CMD. He was unable to repay loans to many

public sector banks, however, private banks recovered all loans.

  Moreover, we have attempted to emphasize the reasons behind the

financial failure of the company from the point of view of mistakes

in strategic decision making.

 Firstly, the director has the duty to act in good faith to achieve the

overall objectives of the company and to act in the best interest of

all its members, employees, shareholders, community and

environment. 

  Failing in his fiduciary duty to shareholders, employees, and

investors.

 Non-Disclosure of Non-Compete Clause.

 Misuse of power and taking personal benefits

2.What measures do you suggest to solve this issue?

 Majority of the respondents have expressed that the top management is

committed to implement training and development programs and

policies.

 It is necessary for the HR Department of Kingfisher Airlines to be

more active in organizing adequate training programs.

 Using swot analysis to identify the risk areas according to that we have

to follow some rules and regulations.

  The performance appraisal ratings should not be affected by personal

relationships, likes, dislikes etc. to make appraisal fair and development

oriented.

 Follow guidance given by SEBI through the listing agreement only

company going to offer the shares to the public with good credit rating.

Conclusion:

For a business to be successful the main focus should be on creating an

efficient work-frame, taking appropriate decisions, establishing healthy

competitive environment, improving quality of service and standing in unity to

find best solutions to problems. Many airlines come and go while the others

have gained a strong ground in this business. The grand and ambitious

Kingfisher Airline’s project suffered huge downtime due to improper strategic

decisions and mismanagement by

the group.

business. The grand and ambitious Kingfisher Airline’s project suffered

huge downtime due to improper strategic decisions and mismanagement by
the group.
With regards

Bk mahalakshmi

Management faculty

Aditya degree college

Gopalapatnam

Visakhapatnam