Meanwhile in India

If one reads the Indian media on a daily basis, one is led to conclude that Force India owner Vijay Mallya’s business empire is in a mess, or Mallya does not have very many friends in the Indian media; or both. There is no sign of trouble in F1 at the moment, thanks it seems to money that is being paid by sponsor-partner Sahara, but elsewhere in Mallya’s empire things are not going well, although he continues to swan around at races, partying on his superyacht in Monaco and Valencia and being unrepentant about his lifestyle. Over in India this kind of behaviour has annoyed employees of Kingfisher Airlines, who have not been paid for months. Some of the pilots went on strike at the weekend, causing the company’s executive vice-president Hitesh Patel to send an email that finally acknowledged that the business is in deep trouble. Patel said that it was “a critical juncture, which will define whether we make it or not”.

“I understand and empathize with the amount of personal issues you and your family have been through due to salary delays,” he continued. “I also understand that in spite of our best and most sincere endeavours, we may have failed on the timelines committed… your actions over the last few days continue to do irreparable harm to the airline. I urge you to please resume work.”

Mallya joined in, telling the pilots that: “Damaging the future of Kingfisher in the public eyes is not going to produce cash. This only makes my recapitalization efforts more difficult by causing concern and apprehension among our potential investors.”

Pilots, however, told the Press Trust of India that “Vijay Mallya’s communication to the employees conceals more than it reveals. While he claims over 75 per cent staff have been paid, he conveniently ignores the fact that he has still to pay four months’ salaries to them. Now we have come to a situation where we are left with no option but to move the labour court over the issue”.

The Wall Street Journal reported that the airline has its “head in the clouds” over the pay dispute. The airline is currently flying only around a dozen planes, the remainder having been either repossessed by lessors or grounded because of maintenance problems.

The airline, which was started in 2005, has never made a profit and its strategy of borrowing to create growth has clearly failed, leaving the business with total liabilities of around $2 billion. The airline owes lessors, suppliers, lenders, airports, employees and the Indian government. Much of the debt is guaranteed by other companies in Mallya’s UB Group. Kingfisher has already shut down its low-cost operations, ended all international flights and contracted its operations considerably from 400 flights a day.

According to the Firstpost website, lending banks have not shut Kingfsiher down because they are looking for a bigger fish and are “humouring Mallya” because he has pledged shares in his various liquor businesses, which generate plenty of cash, and they are aiming to grab that when the airline finally fails. There have been suggestions in F1 circles for some time that Sahara’s involvement in Mallya’s empire is for this reason alone.

“There is a good chance that whoever is now lending money to Mallya is buying not the airline – which is anyway a dead duck – but his liquor business,” the website reported. Analysts seem to agree that Mallya is now facing the risk of losing his profitable businesses because of the airline.

Lenders to the airline have now asked for the value of the Kingfisher brand to be reassessed. The brand was given as collateral against loans in 2010. At the time the brand was deemed to be worth $180 million. A downward revision of the brand’s value would mean that the company would have to give more collateral for the loan either in cash, pledged shares or other assets, which will not be easy in the current situation.

In Monday trading Kingfisher Airlines shares dipped below their face value to $0.18, hitting a record low on the Bombay Stock Exchange.

There have also been reports in recent days, quoting a whistleblower, that the Bank of Maharashtra made loans to United Breweries that were diverted to Kingfisher. A UB Group spokesperson said that there was no “practice of inter-company funds diversion.

Reports over the weekend in India suggest that UB is now considering the option of divesting non-core assets including its Indian Premier League team Royal Challengers Bangalore… There are reports that some of Royal Challengers Bangalore’s leading players have yet to be paid for playing in the last edition of the the Indian Premier League.

At the same time there are reports that Mallya’s share in the UB Group has slipped from 50 percent at the end of March to around 36 percent because of an increase in the number of shares, following the conversion into equity of warrants issued to an entity, LKP Finance Ltd, which now holds over 16 per cent stake in the business.

There was further bad news when it was revealed that the Allied Blenders & Distillers’ brand Officer’s Choice has toppled UB Group’s McDowell’s as the world’s largest selling whisky brand, according to International Wine & Spirits Research. The report said that McDowell’s has dropped to third behind Officer’s Choice and Diageo’s Johnnie Walker.

On top of all of this, Mallya has come in for criticism because the UB Group has just shifted the ownership of his personal Airbus A319 from Kingfisher Airlines to a group holding company. Reports suggest that this is to prevent lenders getting hold of it.

Mallya loves the profile that F1 provides and has used it considerably to promote himself, however it all has to be paid for and it will be interesting to see whether he can keep all the balls in the air as he continues to juggle his finances in the weeks ahead. If not, it seems that there are plenty of lenders ready to swoop in for the kill. Where this leaves the F1 team remains to be seen. There have been whispers for some time that the operation might be for sale, but to date no-one is buying.

63 thoughts on “Meanwhile in India

  1. When you read this kind of article, combined with the history of playboy team owners/cynical investment types in F1, all it does is reaffirm my respect for the guys like Frank Williams and Peter Sauber. For all their ups and downs, they are still in it for the moment the Red lights go out…

    It is now quite obvious that Williams will be in F1 until it absolutley runs out of money, or is sold on once the Williams family can do no more with it.

    Peter Sauber has already jumped back in to save the team, and has got it ship-shape before stepping back again. I like that it *does* matter to him.

    Of course both entities were dealt a serious beating by BMW in one way or another, and their response to said beating only makes me respect them more.

    It’s a shame there is not more of this in F1, rather than the big yacht/shady dealings factor that is distasteful to so many who follow the sport.

    1. Deffinately agree with you here. Frank Williams and Peter Sauber have a real passion for the sport and it shows. Both of them have racing in their blood unlike Mallya who just wants the playboy lifestyle.

      I have to say I still miss this team when it was Jordan as Eddie and his team were truely passionate also.

  2. Being an ardent force india fan, it feels terrible to see the plight of the owner of the team and in turn the team 😦
    Joe, can you throw some light on the aspect of the possibility of taking over the team by other Indian business houses?
    If my perception is not wrong, you have some significant insight of Indian business and diaspora.

  3. do you predict that Sahara will take over force india from mallya if he has no money left? Also do you know if force India team is in profit itself?

  4. I perceive the Indian “broadsheet” media as very polite, whilst you have the right company.

    You may say the same thing of ours. In a different way.

    Joe, you read too widely, to not notice the similarities.

    Nah, that was a professional insult.

    I dislike VJM and his whole business.

    Especially his personal attitude.

    But replace VJM with JPM over in our world, and you have far nastier things.

    I happened on Mallaya’s Yach lately:

    how does a bankrupt run a boat that costs millions a year to run?

    . . .


    Since I have no involvement with Joe nor Tony F., may I please speak my mind as to these stupidities?

    . . .

    ~ j

    1. “Disclaimer:

      Since I have no involvement with Joe nor Tony F., may I please speak my mind as to these stupidities?”

      No John, you’re clearly a plant for Dany Mallya or Vijay Bahar or something like that. Obviously.

      1. Thanks, Jem,

        not to sure how to take that! 🙂

        if you can find any relationship between me and your named, ask Joe to put us in touch, and I shall give you my credentials.

        Otherwise I always thought Dani Behr hot as heck. .

  5. Joe, Indian “whiskey” is not what we would call whiskey, it is much closer to rum, Johnnie walker is the largest manufacturer in the world.

  6. A few months ago I almost booked a one year return ticket on Kingfisher Airline, but changed my mind after reading this blog.

    Thanks, I owe you a favour Joe!

    I wonder if Kingfishers are also after this man’s blood for infringing their Trademark? seep seep…

    1. Good decision. Reading that lot of the fleet is “grounded because of maintenance problems”, I would not be too trusting of the ones that still manage to get off the ground…

      1. Yes, that plus Indian aircraft maintenance, it doesn’t bear thinking about.

        I wonder if Ralph Schumacher is still using his Kingfisher discount vouchers?

        1. LOL. And agreed about the maintenance. I’ve flown with Air India a long time ago, and the 747 was pretty worn out inside and out. But obviously all necessary parts did work appropriately…

  7. Hypothetically speaking, do u think a manufacturer might be in the wings in the event of a buyout, Joe? Any ones in particular?

  8. You have to give Mallya points for shear gall and braggadocio: he’s patently bust yet has a team in the most expensive sport on the planet, a private jet and a socking great boat. If I didn’t care for honour I’d like a slice of that… who honestly wouldn’t?

    1. Even after he loses the airline, the F1 team, and the liquor business, he’s probably secreted enough away to keep up a ridiculous lifestyle for years to come.

    2. ‘Bloated’ in every sense of the word, seems like the kind of gent who would sell his grandmother (after he sued her). If thats success it may be time for our species to go the way of the dinosaurs.

      1. Perhaps he also seems the kind of guy who took over the business at age 28 after his father died suddenly and increased it from a mid /large company to a huge multinational?
        Or perhaps someone who took over a failing F1 team and injected a lot of cash and hope where it had none?

        Sure he has a big boat -or two- and a vast car collection but his empire as a whole is making profit so one would expect him to enjoy it.
        It is also quite possible he will be forced out by his ‘brother’ but that isn’t necessarily a good thing. He misjudged the airline market and he borrowed substantially to prop it up in the –vain- hope it would come good. Sadly that isn’t going to happen within the time frame and he may lose everything but many entrepreneurs fail many times and they usually continue living the life whilst other pick up the cost. When Donald Trump went bankrupt for the 4th time he was still far richer than I could ever dream of yet left billions of debt

        Sure dislike the guy for no other reason that you want to be in Joes gang but don’t exclude the good he has done.

        1. I do not have a gang. I write about this person because his “efforts” affect the jobs of people in F1.

          1. I do find it strange why people read this blog only to disagree with what you say Joe and usually in a way that is offensive and shows a distinct lack of breeding or manners. All this when you are pretty much in the know and I assume are an ear to whisper in to break stories etc. Then they write what Wikipedia says to try and look smart.

            1. What a pompous reply..can i only read this blog if i agree with everything that is said on it?Life would be pretty boring if we couldnt have a difference of opinion.Mallya may be a rogue but not everything he’s done is worthless as is sometimes suggested..

            2. Oh dear I’m not sure if you meant to come over as a complete and utter pompous tit but you certainly have. For your interest I have been around The Jordan factory since 1998 and have been in there more times than I care to remember(add today in fact). I also knew about the Sahara story long before Joe broke it (if he indeed did?) so be careful where you cast aspersions

          2. You may not consider them to be -understandably so- but even the most vain man would blush as some of the sycophantic outpourings often seen here. Then there is the rush to defend your ‘honour’ if someone either disagrees or holds a counter view, as if you’re somehow incapable yourself or even in need of such assistance. It amazes me that grown men can act that way towards a journalist in an opposite way I am mystified others hate Lewis or Fernando merely because he races for a different team to their chosen one. Nowt as queer as folk I guess…
            Personal attacks I agree should be off limits but disagreeing should be part and parcel of normal intercourse. It also heightens the experience as the replies below often expand a topic. I don’t treat your blog as some sort of sermon on the mount but as an interesting alternative view of F1. I guess that differentiates me from your followers but I give that credence to no one: least of all a journalist 

            You also know what a mess Stryker was and the lack of investment the factory had during those years. It was pitiful and they lived hand to mouth. Even before then it has been suggested Bernie bailed out EJ to the tune of a rather large amount to keep the team going and he still lived the life apparently…
            VJ whilst he may be a flawed character (I haven’t met him personally so can’t comment on that fact unlike most of the posters here apparently) has invested a shed load of money and continues to do so. He also bought a company which had quite a few how would one say it “accounting irregularities” which amounted to a lot of money that had to be sorted too.
            From my perspective it’s clear if he wasn’t that bothered he would have pulled the rug on the airline way back when the losses were manageable and unlikely to have a detrimental effect on the rest of the empire. It’s too easy to say “Ego” when it may be he simply was trying everything to keep it all afloat when the perfect storm was about to engulf him. I don’t know for certain and the fact that he has a yacht isn’t sufficient proof either way

            Not paying wages is obviously a bad thing for all concerned and I sincerely hope it can be rectified but many many businesses fail and many workers get stuffed because of it. That doesn’t mean every boss/owner is a wrong’en. Some are, no doubt, and I have been personally stung by one such being which nearly cost me my house.

            I sincerely hope I haven’t overstepped the mark wif me being form a poor unedukatid workin clarss familee n’all. I’ll go back down the basement and trouble you no more very much obliged.

            1. From what I have read Mallya sounds like the guy that nearly cost you your house, glad to hear you put entremanureal freedom ahead of the well being of your family. Personally I do not like people that do not meet their financial obligations, creative accounting is no excuse.

              If in fact you are the ‘working man’ that you actually insult with “wif me being form a poor unedukatid workin clarss family n’all” (too much Coronation Street) you are always the first to get screwed by these high flyers, not sure why you’d run to there defense. Do you really thing they give a shit about the guy at the end of the line? the ones that are not ostentatious might to some degree.

              Don’t fret if Farce India had not ‘saved’ Spyker, Midland, Jordan someone else would have as Lotus, Virgin, Hrt had to start fom zero – far tougher

                1. I share you’re sentiment was referring to R.Bartlett who had taken issue with my comment

                  ” Some are, no doubt, and I have been personally stung by one such being which nearly cost me my house”

              1. Andrew, I read that as entre – manure – ial freedom. Amiright?

                For r.bartlett, almost everything you said made sense, right up until “Not paying wages is obviously a bad thing for all concerned . . .”

                I respect what you have to say as to Jordan, and most everything logical you said stacks up to this distant observer, but this distant observer has also on occasion sold down everything he had, so as not to leave people with families defaulting on their mortgage. I’d rather not expand on that. What I want to note is I was once a flash bastard with a inheritance and some attitude, but even then I did not dick people over. (I bet someone will dissent because they thought I was a soft touch, and wanted beyond their worth, mind you!) Yet, as for being insulated from daily regular guy worries, I have had experience of that, both insulated, and acute pain the flip side, and so I have stored up some very choice words for VJM.

                Guess I am guilty also of the occasional gush and swoon in Joe’s direction. He does this blog for free. I have no idea how it converts to cash sales for him, instead believe it is mostly because he cares to get word out about what he cares for. Noted many times, I am also a parochial sod. But a little encouragement never hurts, and I’d much rather have this blog, including your comments, than not.

                1. Entre-manure was intentional, I picked that up from a friend who is an engineer but has a company that does valuations(hard assets) of companies. These nuts and bolts types don’t have much patience for the ‘fast talkers’ and free wheelers. To be fair there I am sure there are plenty of ethical entrepreneurs also I’m just not a fan of ostentatious people who “lawyer up” to walk away from their obligations

                  1. Andrew, I don’t know where to start, but thank you so much!

                    Incidentally, I “lawyer up” to get rid of the bad guys. No crap. Doing it again, this week. Sometimes it costs. My mom got her shoulder trapped in the door of our shoddily managed building, 10 or 20 minutes, stuck, until a passer by released her. She’s tiny, and 80. Not going to start on the fraud, millions taken for “emergency repairs” never started after years, whilst they were in insolvency . . CID said they have no budget, let me go first . .

                    For fun, I have no idea as to what hard assets might be. But who put the word “bank” in “Bankrupt”? (yeah, that one is mine . . )

                    Please may I steal your word “entrepremanure”?

                    Owe you for it, anyhow.

        2. Don’t care how much money you have or don’t have, just pay your bills and don’t screw people over, pretty simple.

          “many entrepreneurs fail many times and they usually continue living the life whilst other pick up the cost.” You may be willing to pick up the bag for this bunch I am not, they’re all yours enjoy.

          You need to be confined with Richard Quest for ‘enlightenment’

          1. “CNN personality Richard Quest was busted in Central Park early yesterday with some drugs in his pocket, a rope around his neck that was tied to his genitals, and a sex toy in his boot,”

            He seems more your type 🙂

            1. It was his annoying on air delivery I was referring to, was’nt aware of the weird personal stuff as most probably are’nt, you get a gold star for your research.

  9. VJM reminds me of an Citibank advertisement at Geneva airport that read “MoneyTalks,WealthWhispers”

      1. I think that phrase might work in M’sia. Just I reckon the private talk is a bit ruder!

  10. It seems to me what’s needed is a team principle with experience of F1.
    How about your mate who used to run Benneton?

  11. The problem with all these wheeler-dealer types is that in the end, the little people are the only ones who get hurt. they always seem to walk away with a sizable pile of assets. Unless your working in Germany, eh Herr Gribkowsky?

  12. Fun thing is, whilst a pal is in deep screaming fits with a mega bank over a Jet Fuel commission* ~ hence refined products are tight, or said mega bank is tight, pick whichever ~ medium term, many think far more crude is coming on line. (Okay, depends a lot what kind of crude, but consider the tides)

    I may have to eat my hat over my prediction Tony F. will be bashed out of the airline game by macro economics. Think I wrote that comment about a year ago, so tick tock for one more.

    Another angle against my prediction: There surely will be many good people looking for a job with Tony, way VJ carries on.

    Maybe I should stop saying nice things about Tony F, until he agrees to fly to my pal’s proposed golfing resort or something, but seems a nice bloke from afar 🙂

    *handbags at dawn, dusk and interrupting dinner, rather him than me!

  13. There is a Kingfisher aircraft looking very sorry for its self on hard standing on the perimeter of Zurich airport. Its been there for weeks now. The parking fees must be huge by now. I see it every time I go pass on the train, I’m not a plane spotter!!!!

    1. Bit of trivia:

      Boeing refuse to let any of their planes go out of service as scrap, before end of intended service life.

      One time a 747 broke down at Delhi.

      So Boeing sent a crew to repair it.

      Then some more.

      Then a whole department.

      They ended up building a tent and scaffold around it, and apparently they could have just given Air India a couple of new ones for what the repair cost. Took 2 years, IIRC.

  14. Dear All
    What is Hindu for “thoroughgoing f#*%ng a#*%$@hole”, does anyone know??
    Four months in unpaid wages for people who work for a living, whilst he is swanning around on his floating gin palace.
    Perhaps the FIA could institute a yearly “complete and utter turd” award- then we could all take a punt on whether Mallya, Bahar or the former boss of Benneton would get the gong.
    He should be taken out and flooged, but, guess that now Jean Todt has the reins, that ain’t gonna happen….

    1. Sigh*… “Hindu” is not a language. It is a person’s religion. To make it clear, what you just asked is quite similar to this: “What is christian for horoughgoing f#*%ng a#*%$@hole”… or… “what is jew for…

      The language is “HINDI”. It just so happens that there is only a difference of 1 letter between the words. Spread the news. When people use the word “hindu” for something related to the language, they just look really silly and dumb.

  15. Something tells me that Joe has serious issues with Mallya.. personal issues. I have never heard Joe speak of anything good about Mallya or Force India in general. I follow sidepodcast where Joe has inputs on their podcasts and every single time something related to Force India comes up Joe barely stops short of verbally abusing the team. Seriously. What happened? did Mallya forget to invite Joe to one of his parties?

    1. I have explained what the problem with Mallya is. If you do not accept that then that is your problem. The team is doing a very good job and if you read more of my stuff you would see that. The only problem I have with Mallya is that he does not pay his bills and let’s the small people suffer. That is wrong on a very basic human level. On the subject of Mallya’s parties, I am very picky with whom I am seen so I would not be there anyway, I find him rather vulgar and louche.

      1. I dont see how this blog entry has something to do with F1. As long as the staff in Force India is paid, then it is unfair to keep banging on him. FI is part owned by Sahara, which is a giant when it comes to sponsorship in sports and I dont think they will agree in holding back salaries of the staff involved. Besides, the guy owns various other companies which all are going quite well and the salaries are paid on time (with extra bonuses). Just one of his companies is ready to go down the drain and every one is ready to hang him.
        PS: About the parties: Surely the view point of him being vulgar and louche and not wanting to be at his parties is personal. Otherwise, everyone would have stayed away from his parties. If everyone stayed away, then there wont be a party. All I am saying is that very few people in the paddock have issues with Mallya.

          1. I know nothing. But common sense implies that if the rest of the paddock had the same views as you, then they would act the same way too. In that case, I dont understand why Mallya’s yacht parties are a huge hit with most of the people in F1.

            1. Are they? How do you know? Are you on the boat? Declare why you would know what you are talking about, or stop wasting my time.

              1. I simply said what I saw on TV or read in the paper. There was a dialogue on TV by the BBC commentators during one of the free practice, about them attending Mallya’s party the last day.
                The BBC also showed Jake Humphrey and Eddie Jordan talking about why they cant find any people to talk to because they might still be at the “biggest party in Monaco” that weekend hosted at Mallya’s yacht”. There was a segment on SKY F1 showing a few glimpses of the party and it showed several drivers- Jensen Button, Lewis Hamilton, Kimi Raikonen, and a couple others, and the FI drivers too. According to the formula1 website and sky f1, all the big shots of the paddock were at the party. Formula One group CEO Bernie Ecclestone, most of the Formula One contingent, CVC’s Donald McKenzie, McLaren team principal Martin Whitmarsh, Lotus counterpart Eric Boullier, Eddie Jordan, former world champion Damon Hill, several drivers, Antonio Banderas, yada yada yada..
                Either all of the media (which says Mallya’s parties are now almost like traditional start to the F1 weekend) are lying, or you are simply refusing to accept the truth.
                PS: since you asked me the question of how I know and whether I was on the boat, let me return the favour and ask you one back.

                How do you know what is happening in King Fisher airlines? Are you a board member? Did you talk to any of the pilots or the staff? Why would you know about anything about the airlines other than what the “media” is publicizing? Declare why you would know what you are talking about.

                1. If you read the post I wrote carefully you will see how one finds out about these things. It is not rocket science. In case you had failed to notice, I write about F1. The airline business is reported on by other qualified people and if you read a wide variety of reputable sources, the picture is very clear. Obviously some sources are biased, but I have found Indian reporters to be very “old school” and not at all like their muck-raking colleagues in the west. I do not give a toss about Vijay, one way or the other. My personal opinion is that he is an arrogant wastrel and not very intelligent, and he is surrounded by a bunch of simpering acolytes, like yourself, who make the problem worse by kissing his ring and telling him he is wonderful. I have seen 20 Mallya-like team owners come and go in the past and I will see him go as well. It is just a matter of time. What I care about is that the team and the families of those in the team know exactly the dangers that exist when dealing with people like that.

  16. So, I guess you are not going to contradict me on whether on not what I said is true. You were quick to say that people in the paddock do not like Mallya. And also readily and subtly said that his parties are lame. I might not know anything about the paddock, but it has been proved that your views on Mallya are absolutely personal and is not shared by the rest of the F1 personals.

    Secondly, resorting to bad mouthing someone when you are on the back foot is horrible. And that is where you are also wrong. I don’t kiss his ring. I dont think he is great. I don’t even think he is anything. But what I do care about is your constant habit of bashing him whenever you get the chance. From my first post you can see that I called you out for having “personal” issues with him. I remember in sidepodcast that you bashed on him a lot for putting Liuzzi out of a job. I didn’t see you expressing even half the anger/words when Buemi and Alguersuari were kicked out for no reason whatsoever. or when Heidfeld was thrown out. This is what I have been trying to say all along.

    I enjoy reading your posts on F1. But what I don’t enjoy is your unabating “Mallya Bashing”. It is unprofessional to write articles on the basis of personal prejudice.

    Very few people share your views on that guy. I don’t like him. That does not mean i hate him either. He has money. He can use it as he wants. If the staff of the team don’t get paid, then it is a huge matter for the team. Anything other that that, and it is obviously personal issues and nothing else. If that is what compels you to write or say about these things, then it is truly unprofessional.

    Since you care so much about the families of those involved in the team, I expect you will be doing similar reports on Sir Frank Williams and Red bull. Will you?

    1. If those teams are run by fools then yes I will. As to the rest of your post. It is fairly offensive to me. I think you should learn to treat this blog like a house. My house. I invite you in to be entertained and you come in and look at the carpets, curtains and decoration. It is not polite to be rude about them.

      In any case I am bored with this subject. If I wish to kick Mallya I will kick Mallya. If I wish to praise him, I will praise him. My blog. My rules.

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