Mallya clutching on to the stump of his empire

The once-upon-a-time king of good times still behaves like one. Look at Vijay Mallya’s television interviews every time Royal Challengers Bangalore wins a match in the ongoing Indian Premier League. But the apparent exuberance cannot hide the hard reality that the king has little control over his once-empire.

Mallya, who inherited the scattered liquor business of father Vittal Mallya at 27, painstakingly built it into a Rs 19,000-crore empire. But the irony is that the companies he controls now account for a mere 4.5 per cent of the UB Group’s revenue. Mallya has ceded management rights of one operating company after another in the past few years.

This solely controlled part of his empire accounts for less than one per cent of the UB Group’s current market capitalisation of Rs 60,636 crore. In this, the total value of Mallya’s holding is Rs 11,755 crore but Rs 8,505 crore worth of these shares are pledged with lenders, mainly for loans against the grounded Kingfisher Airlines. A consortium of lenders led by State Bank of India has claimed over Rs 6,300 crore from Mallya and says even if all the secured assets are sold, their dues will not be covered.

“Mallya did well till he stuck with the core of liquor and chemicals business as he really built on whatever his father left him,” says Jacob Mathew, managing director at investment bank MAPE Advisory. “But running an overleveraged airline has really cost him.”

The five companies he controls are also showing signs of slipping out of his hands. Mangalore Chemicals & Fertilizers is in the midst of a bidding war. According to a pact with Saroj Poddar’s Adventz, Mallya will continue to have considerable say in the management of MCF, even if Adventz wins the battle with Deepak Fertilizers for MCF. In effect, the only operating company he will be left with is UB Engineering, which clocked Rs 213 crore revenue in the first nine months of 2013-14.