The Curious case of Mr. Vijay Mallya

"Vijay Mallya's dues have been more than recovered, then why is he still being called a fugitive, a fraud, a chor, a lootera?"

This is a growing narrative, especially after Mr. Mallya's latest interview. And it's actually a natural question considering whatever facts he's recently pointed out.

As per Mr. Mallya, the DRT recognised the collective debt on his entities at about ₹6,203 Cr. Including interest. And the official DRT recovery officer reports acknowledged that banks had already recovered ₹10,200 Cr. Moreover, the Finance Minister's report formally submitted to the Parliament said that the dues recovered stood at around ₹14,131 Cr.

Whether it be ₹10,200 Cr of actual cash recovered by banks (DRT), or the ₹14,131 Cr worth of attached assets restored (FM), the dues have been recovered, and then some. Then why the fuss?

Well, there's bound to be fuss. And while there's always a political hue in business stories of this scale, you can't blame the system for going against Mr. Mallya. Atleast in this case.

Firstly, Mr. Mallya was the personal guarantor for the debt he took on for Kingfisher. So when Kingfisher went down, a lot of those covenants were bound to get invoked. But here's the problem: As that debt was staring at turning bad, Mr. Mallya was not really keen on fulfilling those obligations. Despite him having pledged his UBL shares to get the loans for Kingfisher, when the airline started going south, here's what he had to say:

“I will not sell my family silver to pay for KF. UB is a thriving business and has absolutely no connection with KF’s problems.”

- Dawn, 2012.

“I built UB into India’s leading beer company and USL into the largest spirits company - I will not sell these under stress created by KF.”

- ET, 2013.

"Never intended that sale of brewery shares should become the solution to KF’s financial problems.”

- FT/Mint, 2016.

Oh, really? Those are absolutely fair points. But then why did you pledge UB shares for KF's loans, Mr. Mallya? Why did you do that? You can't have the cake and eat it too, right? If you pledged shares and took a loan, they'll be gone if the loan hits default. This shouldn't be a surprise.

Yet, when when KF defaulted (in 2012), Mr. Mallya tried every trick in the book to avoid the share transfer. His lawyers requested injunctions after injunctions, delays after delays. Citing ongoing negotiations, efforts to refinance, claims that share sale would "destroy value", and so on. They argued that the biz "should not be harmed" because of the airline.

Even all that would've been okay. But as things were coming to a real head, Mr. Mallya just fled from the country and embarrassed everyone. That basically changed the narrative from a mere civil default to a criminal prosecution.

So while the government has been able to recover KF's dues, it's not been able to do so BECAUSE of Mr. Mallya, it's been able to do it DESPITE him. Also, it doesn't clear him of the criminal proceedings. Can't forget that.

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