Probably, it is time now to detail out some of other risks that Mallya has taken in his tumultuous corporate career. This is an account of a 
man whose corporate strategies would baffle a few, scorn others. Two decades back, his father (the late Vittal Mallya) passed on the baton of UB Group to the 27-year-old Vijay. Ever since, nothing has been easy for this man, full of energy but condemned by his critics as a mere ‘playboy’. Two years after he became UB Group’s chairman, a humiliating income tax investigation saw Mallya’s self-exile to London, sans fortune, sans glory. All he probably had then was the cloud of bankruptcy over his head and that of the UB Group.
But then, he deftly persuaded HSBC to fund a 100% leveraged bid for Berger Paints and, eight years later, sold his stake for a mind-blowing $66 million profit. That was it. His risk had paid off. He came back to India and brought a storm with him that blew the tops and bottoms of many citadels willing to stand as obstacles in his way. And this was not the only piece of high-risk glory for him. In fact, this was just the beginning.
Do you recall the Shaw Wallace episode, and the wave that created was when after owner Manu Chhabria’s death in 2002, the Chhabria family excluded Mallya’s UB from the bidding process? Mallya went hostile and offered Rs.15.45 billion for Shaw Wallace and its subsidiaries in June 2005. It seemed like he was paying a high price. The result is for everyone to see. Mallya recalls, “It was a high-risk strategy. I had waited for 20 years. Shaw Wallace transformed my liquor business. It gave us a 60% market share in India, and improved profitability because both UB & Shaw Wallace had spent crazy sums competing with each other.” Today, the UB Group, strengthened by acquisitions, is the second-largest liquor producer in the world.
Many doubts were also expressed, when Mallya decided to launch a new airline; it was a sector where all the players were incurring huge losses. In addition, it seemed an odd business decision as UB Air, India’s first private air service launched in 1990, was later reduced to just providing helicopter services due to lack of profitability. Surely, any promoter would have thought many times over before launching another airline. His critics may have been proved correct as Kingfisher Airlines’ accumulated losses have touched $300 million in two years of operations (FY 2006 & FY 2007). But then, that’s not Mallya’s style.
As if this was not enough, Mallya went ahead and acquired 69% stake in another loss-making low cost carrier, Air Deccan, in December 2007. Air Deccan’s accumulated losses totted up to about Rs.20 billion. And Mallya has already evinced serious interest to ply on international routes, especially between India & the US. Now, what can be considered more risky than that? But, for Mallya, risk seems to be the opium of his life. It appears to be an even bigger gamble when you realise that his parent UB Group had accumulated losses totaling Rs.1.53 billion till FY 2005. So what is the primary force that gives rise to that risk-related fire in his belly and the utmost zeal to excel in disconnected areas that look like non-starters in the beginning? When asked about this issue, Mallya shoots back, “Passion. I have a passion for several things, and I try to rotate around things that I am passionate about. So, even in the future, I will be foraying into many new arenas about which I might know little but still have developed a passion. And perhaps this is what makes me different from many other industrialists in India.”
When asked about the value of brand Mallya, Harish Bijoor, CEO, Harish Bijoor Consultants, asserts, “Among the few names that I can think of when it comes to taking calculative risks, Mallya stands out distinctly. He is not a person who makes rash decisions but calculative ones and indeed stands out. He has through his risky strategies created world class brands and has managed UB better than many could have ever imagined. Indeed, he was close to bankruptcy once, but he has managed it well and has come out stronger as an entrepreneur.”
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
man whose corporate strategies would baffle a few, scorn others. Two decades back, his father (the late Vittal Mallya) passed on the baton of UB Group to the 27-year-old Vijay. Ever since, nothing has been easy for this man, full of energy but condemned by his critics as a mere ‘playboy’. Two years after he became UB Group’s chairman, a humiliating income tax investigation saw Mallya’s self-exile to London, sans fortune, sans glory. All he probably had then was the cloud of bankruptcy over his head and that of the UB Group.But then, he deftly persuaded HSBC to fund a 100% leveraged bid for Berger Paints and, eight years later, sold his stake for a mind-blowing $66 million profit. That was it. His risk had paid off. He came back to India and brought a storm with him that blew the tops and bottoms of many citadels willing to stand as obstacles in his way. And this was not the only piece of high-risk glory for him. In fact, this was just the beginning.
Do you recall the Shaw Wallace episode, and the wave that created was when after owner Manu Chhabria’s death in 2002, the Chhabria family excluded Mallya’s UB from the bidding process? Mallya went hostile and offered Rs.15.45 billion for Shaw Wallace and its subsidiaries in June 2005. It seemed like he was paying a high price. The result is for everyone to see. Mallya recalls, “It was a high-risk strategy. I had waited for 20 years. Shaw Wallace transformed my liquor business. It gave us a 60% market share in India, and improved profitability because both UB & Shaw Wallace had spent crazy sums competing with each other.” Today, the UB Group, strengthened by acquisitions, is the second-largest liquor producer in the world.
Many doubts were also expressed, when Mallya decided to launch a new airline; it was a sector where all the players were incurring huge losses. In addition, it seemed an odd business decision as UB Air, India’s first private air service launched in 1990, was later reduced to just providing helicopter services due to lack of profitability. Surely, any promoter would have thought many times over before launching another airline. His critics may have been proved correct as Kingfisher Airlines’ accumulated losses have touched $300 million in two years of operations (FY 2006 & FY 2007). But then, that’s not Mallya’s style.
As if this was not enough, Mallya went ahead and acquired 69% stake in another loss-making low cost carrier, Air Deccan, in December 2007. Air Deccan’s accumulated losses totted up to about Rs.20 billion. And Mallya has already evinced serious interest to ply on international routes, especially between India & the US. Now, what can be considered more risky than that? But, for Mallya, risk seems to be the opium of his life. It appears to be an even bigger gamble when you realise that his parent UB Group had accumulated losses totaling Rs.1.53 billion till FY 2005. So what is the primary force that gives rise to that risk-related fire in his belly and the utmost zeal to excel in disconnected areas that look like non-starters in the beginning? When asked about this issue, Mallya shoots back, “Passion. I have a passion for several things, and I try to rotate around things that I am passionate about. So, even in the future, I will be foraying into many new arenas about which I might know little but still have developed a passion. And perhaps this is what makes me different from many other industrialists in India.”
When asked about the value of brand Mallya, Harish Bijoor, CEO, Harish Bijoor Consultants, asserts, “Among the few names that I can think of when it comes to taking calculative risks, Mallya stands out distinctly. He is not a person who makes rash decisions but calculative ones and indeed stands out. He has through his risky strategies created world class brands and has managed UB better than many could have ever imagined. Indeed, he was close to bankruptcy once, but he has managed it well and has come out stronger as an entrepreneur.”
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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