Vijay Mallya To Lose His Last Jewel!

Even as beleaguered business man Vijay Mallya apparently heading back home after he was arrested in London last week, the biggest shock that awaits him at the home turf may not be the loan recovery procedure by his lenders. But an unceremonious exit from United Breweries, the country's largest brewer and his most valuable business entity that remained under his control in India.

His most valuable corporate tag, Kingfisher beer maker United Breweries, that kept his liquor baron title still unaffected, too is slipping out of his hand. While his partner, the Dutch-brewer Heineken, has already increased its stake in the company to above 43 per cent (a clear majority) and still eyeing another 11 per cent from Mallya’s own investment holding company, UB Holding, which is ordered to be wound up by the court, the latest decision of the Heineken-controlled board of United Breweries to ask Mallya to step down as chairman, has made his final exit from this company imminent.

United Breweries, the undisputed leader in India's beer industry with at least 52 per cent market share, had been the only financially stable and profitable entity within the UB Group. The company, in which the Mallya owned-UB group and British brewer Scottish and New Castle held equal stake of 37.5 per cent each earlier, saw the entry of Heineken into it when the Scottland –based beer maker sold its stake to the Netherland company in a global deal. Although the international deal between S and C and Heineken took place in 2008, the management change in the Indian company was delayed as Vijay Mallya had raised reservations against Heineken’s direct entry into its management citing conflict of interests in the market. Finally, Heineken had to make consensus with Mallya by agreeing to certain conditions, including a shareholder pact to keep Vijay Mallya as chairman for life.

But this shareholder agreement has now become null and void after the stock market watchdog recently suspended Vijay Mallya from participating in any market related operations as well as holding any responsible positions in listed companies, claims Heineken. The regulatory order was following the declaration of Vijay Mallya as a ‘wilful defaulter’ by a group of lenders. Vijay Mallya had left the country last year following the threat of an arrest in the Rs 9000 crore loan default case filed by a group of banks who had lend to his failed Kingfisher Airlines venture.

Although the board of United Breweries has written to the chairman requesting his resignation, Mallya is yet to react to the same. Therefore, the company, though have been conducting its board meetings without a regular chairman for sometime now, is yet to proceed against Vijay Mallya in this regard. Perhaps, it is still in a fix about the whole process of taking a call between the shareholder agreement and the regulatory order.

Vijay Mallya, who had unsuccessfully fought a similar case at United Spirits, had to finally resign from his position as chairman in the company in 2015. Although the new management at United Spirits controlled by UK’s Diageo, which bought the company’s majority stake in 2010, got him resigned from the position after a fierce legal battle, it had to pay a heavy compensation to Mallya.

Heineken’s primary dilemma could be between a long legal fight or to settle it with a cost. But, what is obvious in the matter as of now is an imminent exit of Vijay Mallya from United Breweries, the last jewel that remained in his business empire, too finally.