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The king of good time flees India, pockets 40 million dollars

  • The King of Good Times and once considered India's Richard Branson is once again in the newspapers and once again for the wrong reasons. The liquor baron, who once owned the Kingfishers Airlines, is in the news for fleeing India after not willing to pay up the loans he has in his name. According to reports, he owns 9000 crore rupees borrowed over the span of a few years to a consortium of 17 banks in India.

    The reluctance of Mallya to pay up the loans was known to many in the business field. Way back in 2010, when the second round of loan procurement was raised for Kingfisher Airlines, the banking sector were split in opinions whether to provide loan to Mallya for reviving the Airlines. On one hand, many state-owned banks were in the favor of lending the money as they saw the opportunity to redesign the business model of Kingfisher's and their operations. Being the optimists that bankers were at that point of time, the money was lended to Mallya albeit at decent interest rates.

    The problem soon started to scale in measure as Kingfisher Airlines declared that they haven't had a single quarter of profit in their 8 year long presence in the aviation business and moreover were not in a position to pay the money back to the banks. The state-owned banks were also in worry as they were answerable to shareholders for providing the loans to Mallya even after knowing the problems faced by the company. In early 2011, the bank consortium including SBI had converted debt amounting to Rs 1,400 crore into equity at a 60 percent premium to the prevailing market price. 

    The Enforcement Directorate on Friday also issued a notice and summon to the liquor baron to appear before it on the 18th of March. Along with issuing the summon to Mr.Mallya, the Directorate also issued notice to all 17 banks to provide it with documents and proofs pertaining to Mallya's procurement of loans from them. Mallya left the country on 2nd of March to U.K. In one of his recent tweets, he described his travel to UK as a business visit and called himself an international businessman.

    In his own words,

    “I’ve already been branded as criminal. I do not feel the time is right. I feel passions are high. People need to think rationally. I’ve seen the highest to the lowest points in this matter. But I hope that I return one day. India has given me everything. It made me Vijay Mallya. There was a lookout notice issued against me last year. But I didn’t ‘escape’. Why am I being portrayed as a criminal now? Loan defaults are a business matter. When the banks give out loans, they know the risk involved. They decide, we don’t. Our own business was flourishing, but plummeted suddenly. And if people are doubting the integrity of bank employees, then why point the finger at me? I’ve always taken things on my chin. I’ve lived grand and helped people do the same. I’ve never hidden any aspect about my life. I’m one of the most open people. I’m forced to go into hiding and that makes me sick. “

    OUR TAKE

    The chances of Mallya returning the money he owes to the 17 bank consortium is very less. This is because of a simple fact. H simply does not have the assets to pay the loans back. Let alone the loans, the amount of interest piled up is in itself a Goliath to suppress. Now Kingfisher hardly has any assets left for banks. Even if banks go ahead and sell Kingfisher assets such as the Kingfisher House in Mumbai, the problem will not even be half solved. Mr.Mallya is not the only one to be blamed for this sad occurrence. Even after knowing the company's plight 6 years back, the banks decision to further refuel Mallya's ambitions can also be put to question once the trials begin.


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