Introduction –
The Happened Vijay Mallya and Kingfisher Airlines controvercy and faced legal troubles for defaulting on loan, leading to extradition proceeding. “King of Good Times” Once upon a time, a person whose lifestyle was the brand value of his business, being declared bankrupt is a very painful journey for any businessman. That’s why it is said many times that it is always good to progress by being sensitive towards the society. In which we live and the employees of the company are the assets of the company, being sensitive towards them gives a message to the society towards you.
Right decision at the right time and experience of lot of failure, whether it is your own or learned from others. Continuing success sometimes builds overconfidence and kills thinking power. Similarly, at the age of 28, Vijay Mallya, who became chairman of United Breweries, had to resign from the UB Group after the failure and controversy of the Huva Kingfisher airline. Diageo, who became the new chairman, filed a fraud case of $181 million against him.
Vijay Mallya’s original business was beverage production and he was giving good performance. Talking about India, he was dominating in this sector, but buying Deccan Airlines was his worst decision. This was not a logical decision, it was an emotional decision as they were not getting permission for international flights. Here we will look at who is wrong and who is not right, we will discuss the facts and analyze how they and their proposed brand got hurt.
Kingfisher Airlines –
The subsidiary company of UB Group was established in 1978 and Vijay Mallya was its chairman from 1983 till the controversy. The Kingfisher brand was one of the Most Trusted Brands of 2012, which means the company’s project was performing well. He launches this brand of the Aviation sector of the son’s birthday, which is the gift to his son.
The West Indies team was sponsored by the King Fisher Company in the 1996 Cricket World Cup and it was performing well under the brand. In the meantime, he tried to do business in many sectors, but later started focusing on beer production and made India’s number one brand.
Royal Challengers Bangalore This IPL cricket franchise was bought by Vijay Mallya through United Spirits in 2008. He tried his hand in many such fields and his biggest mistake was to enter the aviation sector. Which was one of the lowest profit margin sector. But business like a status symbol in which making profit making company is very skillful work.
About Vijay Mallya –
Vijay Mallya inherited the business from his father who was the chairman of the UB Group and after his death at the age of 28, he took over the company and made the King Fisher brand an established brand in India and around the world. He uses the Indian premier league cricket craze to utilize the business brand of his Aviation company Kingfisher.
He was known for his luxurious life and he had bought some things in the auction of some historical items which was very much discussed. He was widely known for publishing Kingfisher’s Calendar. His downfall main reason was his luxurious lifestyle and when there was strike running of their kingfisher staff for salary and he was in luxury party event. This incident went against him and whole media went against him for this.
That was the biggest reason for the growth of his Kingfisher brand because although beer production is not allowed in India, yet he did a lot of branding by organizing Kingfisher branding events, things like cricket sponsorships and made India the number one brand in that region. And even today he is giving good performance. Even though he no longer held any position in any of these companies, his work was especially successful for this product.
Establishment of Kingfisher Airlines –
Kingfisher Airlines were established in 2003 and was closed in 2012. But when it was started, then the Kingfisher brand had become a very big brand in the Indian market and Kingfisher Airlines became the best option for the people in domestic flights. Kingfisher is given services of such a ways that the their competing company doesn’t afforded to it.
For a Kingfisher company starting period was very good, but the company wanted to run its flights now at the international level . Its licenses could be obtained after about five years of experience in this field, such was the government rule. The problem of the aviation sector is that the profit of margin in it is very low Therefore, companies had to make a lot of effort to earn good profits.
During that period due to recession and an increase in international rate of crude oil, the profit of this sector was badly affected. An Acquisition of other a competitor company to get an international flight license is a very wrong decision. Because after that decision things went all wrong including hikes in crude oil prizes. Company Also provided the services which increased their service cost immensely.
Business Model of Kingfisher Airlines –
The liquor business in India is viewed negatively in the society, so Kingfisher may have been a big brand in India. But it was not allowed to brand directly. Hence it was branded as Kingfisher Soda. But still Vijay Mallya was not getting success or respect like other business personality in India. So he tried to establish this brand in India in a positive way through Kingfisher airline business.
Before entering the aviation sector, this business model was being run through cheap tariffs which had huge profit margins. Vijay Mallya decided to make Kingfisher airline as his luxury lifestyle and for this he invested a lot of money. The biggest problem of this sector was that the price of oil used to run the aircraft kept changing all the time, due to which the profit of margin increased the risk.
There were some standards of the government for providing international services, according to which the company had to work in this area, but Vijay Mallya wanted to make this company the biggest company in this area fast. That’s why he wanted to do something new away from the established business model and for this he had invested a lot of money. Which was came in the form of loan from banks and that too not at the original price of the company. But on the business brand of the company which was a big surprise. It was a matter of
Takeover of Deccan Airlines –
When Kingfisher bought Deccan Airlines in 2007, then Deccan Airlines was going through a bad phase. The economy was going through a recession, Kingfisher had to fly international flights i.e. Kingfisher had to land internationally. The company had established itself in the airline industry within a few days, not only did it get established, but had become the top company in this sector.
But he had to fly international flights and the government was not giving permission for this. At that time the rule was that to fly international flights, it is necessary to have five years of domestic experience. Vijay Mallyaji tried a lot to change this law, he himself was also a member of the Rajya Sabha but did not succeed, so first tried to buy Air Sahara but did not succeed and finally bought Deccan Airlines in 2007.
Failure of Kingfisher Airlines –
Kingfisher Airlines buying Deccan Airlines was the worst decision of Vijay Mallyaji in his life as Deccan Airlines was famous in the airline industry because of their economic business model and Kingfisher Airlines was famous among the customers for their luxurious services.
The policies of both were completely different, in that too Deccan Airlines were running at a loss. The company kept the luxury product of Kingfisher airline as it is and changed the name of Deccan Airlines to Kingfisher Red. In the initial days, its tariff was kept low like Deccan Airlines but started providing good services, which earlier this company also sold water to airlines.
Due to this, customers of Kingfisher Airlines started preferring Kingfisher Red, which caused losses to Kingfisher Airlines. The purchase of Deccan Airlines aimed to enter international airlines, but instead of attracting customers from the other competitor, the two companies themselves competed. Therefore, the policy of Kingfisher Red was changed again and the tariff was increased.
During this, Kingfisher’s loss had increased a lot, due to the change in policy, the customers who were with Kingfisher Airline started preferring the services of another company . Both the companies of Kingfisher started going in loss. By 2012, Kingfisher failed to make any payments and was declared bankrupt. The company showed its inability to pay the loan of about Rupees 9000 crores and its interest separately to 12 banks.
Bankruptcy of Kingfisher Airlines –
The success of any company depends on its management. Vijay Mallya had a great influence on their board of directors and it is said that he had a habit of taking all decisions very aggressively as long as his decisions were going well. was going well
But this had created a decision-making pattern in the company, the decision of Deccan Airline takeover ended the hard work that Vijay Mallya had taken in building the Kingfisher brand, due to which he was appointed as the chairman of UB Group and other companies. Had to step down. But in this failure, which was the flaw, she has given further.
- Investing in a new area other than the area in which the company was doing well was right, but choosing the airlines sector was the biggest mistake.
- Due to the complete control over the Board of Directors, the decision-making process had become a monopoly and resulted in fewer logical decisions and more ambitious decisions.
- Entering the airlines industries was a wrong business strategy, even though earlier all decisions were going well for Vijay Mallya.
- The timing of the takeover was very wrong and the aviation market was going through a bad phase at that time.
Management failed to do financial management and strategy. - While doing business in India, it is necessary to consider the sentiments of the people, when the salaries of Kingfisher airline employees were not being received for many days, at that time Vijay Mallya was celebrating his 60th birthday celebration with pomp, which sent a wrong message in the society, whose loss was Company and Vijay Mallya.
- Legally, Vijay Mallya was not obliged to pay the salaries of the employees from his personal property, but if he did, the action against him would have made a difference as it could send a positive message to the society.
Legal Dispute of Vijay Mallya & Indian Government –
When all this process was going on since 2012 and all our important institutions knew that they can leave India, then the question arises as to why precautions were not taken. The money of the government bank’s means that country’s money and the country’s money come from the taxes of the people through which the banks are run, so in all these processes, the system looks weak somewhere, which the society has to see and take initiative to improve it. Otherwise, Vijay Mallya could not have left India.
Business failure in America is considered a normal process, Donald Trump, the President of America, has gone bankrupt in his life, but in America, businesses are rebuilt by making laws. Being a fully capitalist country, its industries are provided with great protection.
Laws have been made in India also in the form of Insolvency & the Bankruptcy Code in 2002 to protect the insolvent company, so the question is, is Vijay Mallya a criminal or has he made a political scapegoat? We have to understand that it will be dangerous to reach any conclusion relying on the media.
He took refuge in England because it is not a crime to be bankrupt in business in Europe and America and it is not considered a crime in India also because the IBC law has been made in Parliament and protection has been given to insolvent companies. The question is, why this episode is being tossed so much, by the way, Harshad Mehta and Satyam scam, this matter is quite different from this. The conduct of the officers of the banks is very suspicious in this, due to which many abuses of our bureaucracy are visible.
Why did Vijay Mallya take refuge in England?
At the international level, countries treat each other so that there is no hindrance in the legal process, so that no one can take advantage of the crime in each other’s country, so all the countries make this agreement with each other. In legal language, it is called extradition and asylum, in which the criminal takes refuge in another country and if that country gives him protection, then it is called asylum, otherwise his extradition means extradition to another country.
Looking at the past history of England, he has extradited in a very rare case and fails the extradition process by raising the issue of human rights in criminal protection. Our problem is that it takes time to get justice in our judicial system and the most fundamental reason is the problem of under-trail prisoners, taking advantage of this, criminals fail to get extradition in England.
United Breweries Group –
After all these incidents the chairman of United Breweries has changed and the management of all the subsidiary company has been changed by UB Group where Vijay Mallya had an influence whether it is Royal Challenger Bangalore cricket team or other companies but the permanent chairman of UB Group has changed Vijay Mallya.
Fraud case has been filed, it seems that the company which today separated itself from Vijay Mallya has moved ahead in its business, legally it is a separate legal entity. Kingfisher Airlines is a company that has been involved in controversy and has gone bankrupt. Whatever has happened under the influence of Vijay Mallya, all these have come to the fore in the legal process.
Conclusion –
In the end, the journey that started very fast and aggressively and for those who were called “King of Good Times” may come at such a time that it ends the motivation to be a business or entrepreneur. Failure in business is considered a part of business, but failure in India is considered to be the biggest crime. The question is, did Vijay Mallya take a loan for the purpose of luring the banks? We should not forget that the conduct of bank officers is also suspicious in this.
Becoming like him, many people must have dreamed in the initial successful phase, but this gives a Sikh, if you go ahead with a social attitude, then no one can stop you from being successful, but living a life without feelings and living in your own lifestyle, it is the most deadly of all. Decisions are made because no one is immortal here, decisions can be wrong for everyone, but it is always good to take the right decision at the right time and live a simple life, the same work comes in bad times.
The rest Vijay Mallya ji is right or wrong, he will decide the law, whether his intention was to sink money or not, he will know in future when the facts will come before the law. But the money of government bank’s means the money of the public and in a way the money of the country, so it should be returned and failure comes in the life of all business entrepreneurs, but it is very difficult to keep honesty.
