VIJAY MALLYA CASE

INTRODUCTION
• In 1993, Vijay Mallya became the chairman of United Breweries limited at the age of 27.
• He turned the valuation of the company from 40 crores to 6000 crores.
• He invested in different other companies like newspaper business, chemical business. But the
potential of beers & liquor is way high from other businesses.
• In 2007, Vijay mallya became 40th richest person in India.
• In 2015, UB group became the 2nd largest liquor maker in the world.
• In 2005, Vijay mallya launched the Kingfisher Airlines, he also acquired Air Deccan airlines and
launched it with the name of “Kingfisher Red”.
• After that downfall of the company started and they received the new and strict norms from the
petroleum companies & airport authorities of Hyderabad and Bangalore to pay cash upfront.
• Vijay mallya took a loan amount of 6,963 crore from 17 different banks involving the name like SBI,
IDBI, HDFC, ICICI. Within these banks most of the banks are public sector banks.
• Vijay mallya refused to repay loans and then ran away from the authorities of India making a case
“Willful Default”.
 UB GROUP & INITIAL YEARS

• United Breweries Holdings Limited (UBHL) or UB Group is an Indian conglomerate company headquartered in UB
City, Bangalore in the state of Karnataka, India .
• Its core business includes beverages, aviation and investments in various sectors.
• The beginnings of the company goes way back to the 19th century when the British expanded their business to Asia
and found it convenient to open a production line in South India. The company was not founded by an Indian, but by
a British brewery company that was based in India in 1857. The founder was Scotsman Leishman. That is where the
Indians familiarized with beer and beverage production. It was only 90 years later that an Indian- Vittal Mallya
became the chairman of UB Group.
• The company markets beer under the Kingfisher brand, and owns various other brands of alcoholic beverages. It also
launched Kingfisher Airlines, an airline in India whose operation has been halted after problems in 2014.
• The big corporation covers for over 50% of beer production in India, making it the biggest producer in the big
country. More than 40% of market share are credited to the UB Group. 
• Vijay Mallya inherited UB Spirits, known for the Kingfisher beer brand, from his father and turned it around into
India’s biggest spirits maker. He became the chairman of UB Group at the age of 28.
 KINGFISHER AIRLINES

• Kingfisher Airlines was a premium airline launched in 2005

• Soon it became the No.1 domestic airline in India
• Since Airline industry is a very capital intensive industry, Kingfisher Airlines was making losses
• It is mandatory for any airline company to be minimum 5 years to start international travel of their airline
• But Vijay Mallya wanted to venture into International routes, so he acquired Air Deccan which was already
operating on international route in 2007 and renamed it as Kingfisher Red
• Air Deccan was bought with loan money when Kingfisher Airlines was just 2 years old and when it was still
under debt
• Air Deccan was a low cost airline which was directly a contradiction to Kingfisher’s image as a brand
• After some time, Vijay Mallya started giving some of the perks of premium airline to the travelers in Kingfisher
Red which eventually pulled most of the Kingfisher’s travelers as same perks were available in lower cost
• When due to extra services Kingfisher Red’s prices started to rise travelers started using another airlines
• Vijay Mallya started the international operation even before the domestic operation of the company gets profitable and
their is more competition in international market as compared domestic market
• Many fights of the company where operating in areas where very less companies used to operate which was totally fail
strategy
• After some time crude oil rates started to increase drastically till 140$ per barrel, Value of rupee started decreasing and
2008 recession started in the market
• Eventually expenses surpassed the income of the company, so Vijay Mallya shut down Kingfisher Red and tried
approaching investors
• At the time Etihad was interested in investing in Kingfisher but according to Indian rules at that time Foreign direct
investment was not allowed in aviation industry
• Vijay Mallya tried to get FDI approval but at that time company had no money and employees started strikes as the were
not getting paid from last 7 months so he had to stop the operations of Kingfisher as well
• Then later rules for FDI changed and Etihad invested in Jet Airways
• When Kingfisher closed the loan was approximately 9000 crores which company was not able to repay and Vijay Mallya
also denied to pay the loan
• Restructuring of debt was done to help the company wherein Kingfisher Airline shares were Valued at 64.49 while they
were trading in the market at 39.90
• In Meeting with bank Mallya agreed to pay principal amount which was 6600 crores which banks didn’t accept.
• Also the banks approved loan to Kingfisher without thoroughly checking companies financial status and gave loan to him
 KINGFISHER AIRLINE SCAM
• Vijay Mallya wanted to expand his liquor and Airline business. His advisors advise him not to do this
but despite his advisor’s advice, he did the same.
• He sold another company formed by his father to fund Kingfisher Airlines.
• Due to some restrictions, the Indian Government did not allow kingfishers to fly international flights.
• To fly international flights he leveraged United Spirits or United Breweries to buy Air Deccan which
is a loss-making company and merged it with Kingfisher Airlines but it could not make the profits
thus in 2010 Malaya’s this business was in heavy loss.
• To run this business he continuously took loans from banks. He took loans of round 6000 crores by
17 banks.
• Although SBI had declared them as bankrupt other banks kept lending him loans because he was a
member of Rajya Sabha and some parties supported him.
• His company Kingfisher Airlines also held service tax of passengers, PF, Income Tax of Employees,
but did not submit to the PF or IT authorities. The company also did not pay the salary of its
employees when it ran out of cash.
• In 2012 the company had to shut down its operation. Vijay Mallya had a loan liability of Rs. 9000 crore
including interest from different banks and he denied to pay this loan
• The Company United Breweries forced Vijay Mallya to resign the post of chairman of united spirits and paid
him $75M for a severance payment, but Indian courts blocked this payment
• SBI and other banks filed a case against Vijay Mallya but before taking any action against Vijay Mallya he
flew away to the United Kingdom. There is also a side story of Vijay Mallya that he offers banks to pay 4000
crores for settlement but banks refused their proposal
• Allegations of money laundering were first made when it was speculated that Mallya had used loan money
received from the banks and diverted them overseas to various tax havens. Mallya laundered the money with
the help of shell companies with dummy directors that were controlled by him
• The shell companies were located in seven countries, including the United Kingdom , USA, Ireland and
France. These companies did not have any activity and independent source of income. Mallya was controlling
the companies through his office personnel
• The time Kingfisher airlines was already into a huge debt of around 9000 Cr which include loans from various
banks out of which many were issued on personal guarantee on the name of Vijay Mallya which he later
denied paying back, soon after he offered banks to return the capital amount without interests which banks
denied
• Although Mallya has stated that he doesn’t have to give any amount to any bank all these are rumours created
by media to spoil his image . He said that he gave Rs 5500 crores to banks to settle the amount in 2012 at the
time of his insolvency but they have refused to set off
Crucial years of downfall
 CURRENT SITUATION (IN UK)
• Vijay Mallya fled India in march 2016 and went to the Unites Kingdom
• The Indian government made an extradition request to UK authorities on February 9, 2017
• He has been arrested and released on bail 2 times in the UK
• On 10th December 2018, UK District court ordered his extradition to India
• On 20th April 2020 UK High court dismissed appeal against lower court’s order of extradition stating that
a prima facie case was made out against him on account of misrepresentation to the bank in securing credit
facilities, conspiracy and money laundering
• On 14th May 2020 he lost the appeal to appear in front of Supreme Court of UK
• This gave the UK Home Ministry 28 days i.e. until mid June to complete the process of extradition which can
begin only after current UK Home Secretary Priti Patel signs on extradition order
• Because of various undisclosed legal issues, extradition process hasn’t begun yet
• From time to time Vijay Mallya has offered settlement packages to the consortium of banks in exchange for
dropping all cases against him. The latest settlement package offered by him in June is Rs. 13960 crore
• Vijay Mallya still has the option left, to appear in front of European Court of Human Rights (ECHR) or to seek
asylum in the UK
 CURRENT SITUATION (IN INDIA)
• India has asked the British government to not consider asylum to Vijay Mallya if requested by him
• CBI has filed multiple charge sheets which help establish fraud and money laundering charges. These
charge sheets proved as a base for the Crown Prosecution service to fight the case in the United Kingdom
• Once Vijay Mallya returns, the following would be the authorities questioning him regarding the charges
filed against him
- Central Bureau of Investigation (CBI)
- Enforcement Directorate (Under the Prevention of Money Laundering Act)
- Service Tax Department
- Income Tax Department
- Serious Fraud Investigation Office (SFIO)
- Employees’ Provident Fund Organisation (EPFO)
- Securities and Exchange Board of India (SEBI)
• The abovementioned authorities have filed cases and/or charge sheets against him while he was on the run
 CONCLUSION
• There are several other accounts where banks have been struggling for years to recover money and the
chances of recovery is almost nil
• Vijay Mallya’s KFA case prove to be a big lesson for all the stakeholders including the government, legal
system and banking system
• Bringing Mallya before the law and making him pay back the last penny to banks will send a strong message
to other defaulters that there isn’t any free-lunch with public money anymore
• But for this, the system has to be cleaned which is again a big challenge for the stakeholders
• A sizeable chunk of the bad loans in the banking system (over Rs 3 lakh crore bad loans and much larger
chunk of restructured loans) can be attributed to cronies and other willful defaulters
• Realizing the growing threat, the RBI and the market regulator, SEBI have been initiating regulations to
tackle willful defaulters
• The two major tools the regulators have introduced so far are ‘willful defaulter tag’ and most recently the
provision for ‘Strategic Debt Restructuring (SDR)’ power for banks to acquire controlling stake in the
companies, which fail to revive
• But even if banks apply these provisions on loan defaulters, court's intervention prevents or delays any swift
action by banks, diminishing lenders' ability to act.
Thankyou!!
Enrollment Number Name
19BSP2621 Shivam Satpute
19BSP2776 Siddhant Sagar
19BSP2626 Shivam Tyagi
19BSP2693 Shruti Kadam
19BSP2809 Simran Sanan
19BSP2649 Shraddha Singh
19BSP2648 Shraddha Sharma