I am not an absconder, says Mallya

Mallya said despite pledging blue-chip securities and depositing significant amounts in court, 'a successful disinformation campaign has ensured my becoming the poster boy of bank non-performing assets.'

Vijay Mallya, chairman of United Breweries group, has issued a statement to say banks already have securities worth Rs 2,500 crore (Rs 25 billion) against Rs 7,000-crore (Rs 70-billion) loans given to the now-defunct Kingfisher Airlines.

Since the closure of the Kingfisher Airline in April 2013, the banks and their assignees have recovered Rs 1,244 crore (Rs 12.44 billion) in cash from the sale of pledged shares, Mallya stated. 

In addition, Rs 600 crore (Rs 6 billion) was deposited in the Karnataka High Court in July 2013 and another Rs 650 crore (Rs 6.5 billion) belonging to United Breweries Holdings -- the proceeds received by from the sale of shares in United Spirits to Diageo in July 2013 -- was deposited in the court in 2014.

Thus, the aggregate cash recovery/security available is Rs  2,494 crore (Rs 24.94 billion), Mallya said. 

“Legal proceedings apart, I have been making efforts to reach a one-time settlement with the banks, and to that end I have had three meetings and follow-up calls in the recent past and my efforts will continue -- this settlement would be based on additional payments to the banks. . . .Personally, I’m not a borrower or a judgment defaulter,” said Mallya, even as State Bank of India moved Bengaluru Debts Recovery Tribunal to get Mallya's passport impounded and arrested.

Mallya said despite pledging blue-chip securities and depositing significant amounts in court, “a successful disinformation campaign has ensured my becoming the poster boy of bank non-performing assets. 

"In fact, banks have NPAs of Rs 11 lakh crore (Rs 11 trillion) and have borrowers who owe much more than the amount allegedly owed by Kingfisher Airlines -- a fact never alluded to or widely reported by the media as in my case”.

Adding: “None of these large borrowers (whose debt is significantly more than the Kingfisher Airlines’ debt) has been declared wilful defaulters, but unfortunately, United Breweries Holdings and I have been declared wilful defaulters by certain banks on technical grounds.

"I have legally challenged these declarations.”  Mallya said UB Group directly invested about  Rs 4,000 crore (Rs 40 billion) into Kingfisher Airlines, which stands now fully impaired.  “The banks will recover a substantial part of their debt -- my group’s loss is permanent.”

He added, “I have been most pained as being painted as an absconder – I have neither the intention nor any reason to abscond.”

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The past few few days have witnessed a near hysterical campaign in the media directed against me. Recognising that the media was indulging in sensationalism, I thought it was best to let the drama play out – never spoil a sensational story with the truth.

However I feel that the time has come to clarify my position in order to avoid this relentless attack on my reputation.

Kingfisher was launched on the basis of a viable business plan vetted by SBI Capital Markets and renowned International aviation consultants, but despite every effort, it was an unfortunate commercial failure caused by macro economic factors and then Government policies. 

The truth about Kingfisher Airlines and its financial stress due to external factors has been reported by State Bank of India to the Reserve Bank of India in their letter dated 31st January 2012.

A consortium of Banks loaned funds to Kingfisher Airlines, a public Company, but these loans were secured by blue chip securities.

After the closure of the Airline, since April, 2013, the Banks and their assignees have recovered, in cash, an aggregate of Rs. 1,244 crores from sale of pledged shares. 

In addition an aggregate of Rs 600 crore (Rs 6 billion) is lying deposited in the Karnataka High Court [since July, 2013]  and a further sum of Rs 650 crore (Rs 6.5 billion) belonging to United Breweries Holdings has been deposited in the Karnataka High Court since early 2014, being sums realized from the sale proceeds received by United Breweries Holdings from the sale of shares in United Spirits to Diageo Plc in July, 2013.

Thus, the aggregate cash recovery/security available is Rs 2,494 crore. Legal proceedings apart,  I have been making efforts to reach a one-time settlement with the Banks, and to that end I have had three meetings and follow up calls in the recent past and my efforts will continue – this settlement would be based on additional payments to the Banks.

Personally  I am not a borrower or a judgement defaulter. Despite pledging blue chip securities and depositing significant amounts in Court, a successful disinformation campaign has ensured my becoming the poster boy of all Bank NPA’s. 

In fact, Banks have NPA’s of Rs 11 lakh crores and have borrowers who owe much more than the amount allegedly owed by Kingfisher Airlines to the Banks – a fact never alluded to or widely reported by the media as in my case.

None of these large borrowers [whose debt is significantly more than the KFA debt] have been declared wilful defaulters, but unfortunately, United Breweries Holdings and I have been declared wilful defaulters by certain Banks on technical grounds. I have legally challenged these declarations. 

All the enquiries conducted have failed to find any evidence of misappropriation of funds by Kingfisher Airlines or myself – for the simple reason that the allegations and the innuendo to this effect is plainly false.

My Group directly invested over Rs 4000 crore into Kingfisher Airlines itself which investment stands fully impaired – it is not as though it is only the bank debt that has suffered. The banks will recover a substantial part of their debt – my groups loss is permanent. Absent any fraud, the concept of corporate limited liability cannot be ignored. 

I have been most pained as being painted as an absconder – I have neither the intention nor any reason to abscond. I have been a non resident for almost 28 years and the Reserve Bank of India has acknowledged this in writing. 

Over the years, I have built successful businesses in India and abroad. I am also honoured to be a member of the Rajya Sabha.

I have been summoned before various investigative agencies and have duly attended and cooperated with each of them, and I will continue to do so.

My statement as to my personal future after quitting Diageo/USL -- that I want to spend more time in England closer to my children - has been grossly distorted and misportrayed. I wish to reduce my business commitments gradually and devote more time to my family, and that my resignation from United Spirits was a step in this direction.

The payments from Diageo Plc to myself are towards my personal non compete obligations globally except in the UK. In effect, I have given up my interests in the spirits business globally at considerable cost.

I have always lived an honourable life and the calumny notwithstanding shall continue to do so. As to the allegations in the media, all I can say is I hope some sobriety and sense will prevail and truth not held a hostage to TRP.

Image: Vijay Mallya. Photographs: Parivartan Sharma/Reuters