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| Vijay Mallya |
Vijay Mallya provokes strong reactions. Among people who don’t know him, he is seen as a glamorous jet-set figure, fond of fast cars, fast horses and the fast life. His wealth seems limitless.His interests tend to change from year to year. But no matter what he does, he spends a lot of money doing it.
People who do know him, however, are a little more judgemental. Despite the size of his empire and his undoubted success – about which, more later – he never quite gets the respect he deserves from the business community.
Some of this has to do with the very things that make him seem glamorous to outsiders. There is a strong tradition within Indian business of underplaying wealth. Partly, this is because the Indian rich are conscious of their privileged position within a poor country and do not wish to draw undue attention to their money. And partly, it is because the traditional business class regards conspicuous consumption as an essentially nouveau riche activity. The old rich don’t flaunt their money; they let it speak for itself.
But some of the reservations that other business people have about Vijay emerge from the perception that he is essentially a dilettante who flits from business to business, making a success of nothing in particular, but surviving because of the strength of the liquor empire that his father left him.
And, of course, some of it stems from his own personality. In a business environment where Anil Ambani – who does not smoke, drink or eat meat and whose idea of a glamorous leisure activity is to run a marathon – is regarded as flamboyant, nobody quite knows what to make of Vijay.
There is the jewellery to begin with. It is hard to think of an industrialist’s wife who wears as much jewellery as Vijay does every day. Then, there’s his entourage. Vijay is never alone. Wherever he goes, friends, employees and chamchas fly with him. Each evening, his living room feels like the location of a party that never ends. And when he talks, there is always the sense that he is addressing unseen multitudes behind your left shoulder.
All this makes other business people very uneasy.
But it also makes Vijay very happy.
Rich man’s son
I don’t think you can ever fully understand Vijay Mallya unless you understand the circumstances of his adolescence.
He was a rich man’s son all right, but he was never brought up to feel rich. His father, the late Vittal Mallya was a low-profile billionaire who made his fortune in the liquor trade but never drew attention to his wealth.
When Vijay was a child, his parents separated and he moved to Calcutta (Kolkata now) with his mother. His father married again and started a new family in Bangalore. If anybody enjoyed the benefits of Vittal’s wealth, it was this new family. Vijay, by his own admission, lived a fairly normal upper-middle-class existence.He would offer to fix people’s cars to make extra pocket money and he remembers asking his father to bring him back a single pair of Levi’s jeans from one of his trips abroad.
When I first interviewed Vijay about fifteen years ago, the story came tumbling out.How he longed for his father’s approval. How Vittal was physically affectionate when he met his young son but how he never made any commitments about inheritance. How Vijay, at some deep level, envied the Mercedes lifestyle of Vittal’s new family. And how he never dreamt that he would be so rich one day.
These days, he is less keen to tell that story though, to be fair to him, he does not deny any of its essential components. Instead, he would rather focus on his own achievements than discuss the circumstances of his inheritance.
Vittal did finally give Vijay some inkling that he would be his successor – there were no sons in the new family – and he apprenticed him with many of his companies and then sent him to America for some on-the-job training.
Then, long before anybody thought Vijay was ready, Vittal died. At that stage, the UB empire was divided into many suzerainties, each with its own viceroy.Many of these people were Vittal’s contemporaries and regarded Vijay as a brash young man without the talent or the experience to fill his father’s shoes.
Vijay’s first battle was to secure his own inheritance. One by one, the viceroys were either defeated or won over till Vijay was able to take charge of the empire. Then, eager to prove that he was not some idiot son who had hit the jackpot, he embarked on a series of investments, most of which were to end up as failures.
The ideas were all good; it was the execution that was lacking. He diversified into soft drinks but Thril, his cola, was a flop. He recognized the potential of fast food but his pizza chain failed because the pizzas themselves were disgusting.
Then he overreached himself. This was a time when Marwari businessmen were busy taking over foreign companies through the back door. Typically, they would find an NRI and ask him to buy out the foreign shareholding of an Indian company in his own name. Of course, the whole deal would be a benami transaction with the Marwari retaining effective control but because the laws had been amended to encourage NRI investment, the scheme was – on paper, at least – entirely legal.
Vijay approached Manu Chhabria (who was also negotiating to buy Dunlop in partnership with R.P. Goenka during this period) and worked out a scheme to buy R.G. Shaw, the foreign company that owned a controlling stake in Shaw Wallace, UB’s principal competitor.
The deal went sour when the professional managers who ran Shaw Wallace put up a spirited defence. More to the point, they also alerted the enforcement authorities about Vijay’s suspected role in the transaction.
Vijay and Chhabria were both raided. Because Chhabria was an NRI, he was beyond the purview of Indian lawmen. But Vijay had no such protection. He was harassed, interrogated and even arrested. As the pressure grew, he fell out with Chhabria and eventually, when the Shaw Wallace takeover did go through, Vijay had no stake in the company.
By the end of the 1980s with the fiascos of the Shaw Wallace takeover, the failed pizza business, the dud cola drink and the continual prosecutions of the enforcement authorities, it was beginning to seem as though things had gone very wrong for Vijay Mallya.
Perhaps, the viceroys had been right all along.
Global company
Vijay’s response was to become an NRI.At a stroke, he rid himself of all the FERA problems and was beyond investigations of foreign dealings. But being Vijay, he did it in style. There was the massive country house in England and soon, there was a private plane, long before it became fashionable for Indian businessmen to run their own aircraft.
Then, Vijay turned his attention to foreign companies. He looked at Africa and bought into Berger Paints, arguing that he wanted to create the first Indian multinational. I remember talking to him about the scheme.Why, I asked, as politely as possible under the circumstances, would a man who had failed to sell pizzas to Indians imagine that he had it in him to create a global company?
Vijay’s answer was logical. India’s great strength, he said, was the skill of its managers. His plan was to buy undervalued international companies and to install Indian managers to run them. Given the talents of our home-grown professionals, these companies could be turned around at minimal cost. Once that happened, he would either run flourishing multinationals or sell out at a huge profit.
There was no denying the sense in what he said but even in those days, people who knew him well warned me, ‘ Vijay is a great talker. He can sell deep-freezers to Eskimos. The only problem is that he ends up believing his own bullshit.’
Such scathing assessments of his style were not uncommon in that era. Many of them stemmed from a mixture of envy and bemusement. Try and look at it from the perspective of the critics: here was this large, loud guy who had inherited a booze empire from one of the great, low-profile geniuses of Indian industry. Almost everything he had done in the 1980s and the early 90s had failed: colas, pizzas, the Shaw Wallace takeover, Mangalore Chemicals and God alone knows, what else. And yet, he was completely unfazed. His confidence was never dented. He spent money as though it was going out of style. He bought private planes, country houses and dozens of racehorses. How could Vijay possibly pull it off? Surely, something had to give.
And so, for much of the first half of the 1990s, the business community badmouthed Vijay and predicted his imminent demise. He was too disorganized, they said. He was incapable of turning up on time for a single appointment. He treated his employees like chamchas. (One particularly vicious story from that period, told to me by one of Vijay’s contemporaries, had it that Mallya would invite senior managers to play tennis with him. As long as they lost, their careers were assured. But if they dared defeat him ...) The nasty speculation reached its height when Vijay’s business rivals put it about that he was over-committed, deeply in debt, and unable or, perhaps, just unwilling to repay even small loans. As long as all this remained in the realm of gossip, Vijay acted as though he couldn’t care less. But then, Business Today put him on the cover. The headline delivered the killer blow – ‘Is Vijay Mallya going bust’ – it asked.
Vijay was appalled, angered and upset. I met him in Bangalore just after the story appeared and though he tended to blame the piece on a one-time friend-turned-rival (now deceased), he was full of stories about how he had to phone every banker and business associate and assure them that the Business Today piece was not true and that he was far from bankrupt.
Gamble pays off
In retrospect, there is no doubt that Vijay was spending much more money than people thought he had. Worse still, in an era where Indian business still did not have a global outlook, he was spending this money in foreign currency. No wonder other businessmen thought he was overreaching himself.
But the critics made three crucial errors. First of all, they underestimated quite how profitable Vijay’s liquor business was. No matter how his other companies did, the booze operations ensured that Vijay was always cash rich. Secondly, they did not realize quite how much of a risk-taker he was: this was an era, remember, when Indian businessmen tended to get their own money out of their projects even before the factories were erected. So, his rivals could simply not conceive of a man who was willing to put his money where his mouth was.
And third, nobody counted on another factor: Vijay Mallya is very lucky.No matter what he does, he always manages to land on his feet. His failures are quickly forgotten – by the rest of the world, but especially, by Vijay himself – while his successes tend to endure.
So even as the doubters were writing him off, Vijay was concentrating on a dozen other things. It was his ambition to turn Kingfisher beer into a global brand – an effort that even his critics will concede has been largely successful. He sensed an opportunity when the Chhabria brothers fell out and quickly linked up with Kishore Chhabria and partnered him for the successful Officer’s Choice whiskey. (This venture ended in tears a decade later but at the time it had the effect of damaging Manu and Vijay was able to eventually walk away from the deal with no lasting damage.) Then, he developed a fascination with the media. He took over Blitz, obtained the franchise for the Bangalore edition of the Asian Age, invested in television and when his friend Ketan Somaaya suffered from financial difficulties, took over Cine Blitz (which later spawned Hi Blitz, a publication in which Vijay features prominently every month).
He was able to do all this because, far from the public eye, the liquor business was growing from strength to strength. Vittal had been conscious of the danger to the booze industry posed by pious, prohibition-loving politicians (he remembered how Morarji Desai had wanted to ban liquor in 1977) and believed that the future of his group lay in diversification. Vijay understood the argument for diversification but because he was a risk-taker, invested in increasing liquor capacity. It was a gamble that more than paid off as the profits shot sky-high.
Brand ambassador
By the beginning of this century,Vijay Mallya was a fact of life.He had made no attempt to moderate his lifestyle – in fact he had added homes in Manhattan, California and Goa. The horses won all the top races. The fast cars kept coming. The Versace shirts had given way to other trendier but equally flamboyant outfits. There were now more private planes, including a large Boeing 727, which he had customized so that his guests could jive and party all the way to their destinations.
When he was asked about the lifestyle, he even had a smart answer ready.He was in the business of promoting good times, he said. So, everything he did worked as publicity for the UB brand. In fact, he argued, he was doing it all for the company. He was Kingfisher’s brand ambassador.
But even as the parties continued and the booze profits came rolling in, there was a sense in which Vijay was bored. He needed excitement that neither beer nor Black Dog (the world-famous Scotch whiskey brand that he owns) could provide. He had wearied of media, had tired of jetting around the world and had lost interest in creating Indian-owned multinationals.
Politics was the obvious next step. Vijay had always been friends with R.K. Hegde, the former chief minister of Karnataka. As the politics of Karnataka descended into bedlam, Hegde suggested to Vijay that he should enter public life. In fact, said Hegde, Vijay could be his designated successor.
To his credit, Vijay did not approach any of the existing parties, cap in hand. Instead, he created his own party. And when he needed a name, he linked up with Subramaniam Swamy who owned the legendary Janata Party name. Vijay’s own election to the Rajya Sabha made possible by MLAs who shunned their own party candidates to vote for Mallya was not part of this enterprise. But once he entered Parliament, he sensed that this was something he wanted to do.
I interviewed him twice during this period.And while he gave the usual rhetorical answers (‘I am doing this for the future of the children of India’) there was no doubt that he genuinely believed that he had a real chance of wielding effective political power. His plan was as follows: with Karnataka politics in disarray, any new party stood a good chance of winning a substantial chunk of seats. These would not be enough for a majority. But in an era of minority governments, Vijay’s party could well hold the balance of power.
For much of this decade, Vijay was obsessed with politics. He toured every corner of Karnataka (even risking his life when his helicopter crashed), bought Tipu Sultan’s sword as a symbolic gesture, and acted as though he was on the cusp of success.
Alas, it was not to be. Most of his candidates lost their deposits though a couple of MLAs who had used his symbol in nearby Andhra did manage to get elected. A lesser man would have been devastated by the reverse. Vijay just put it behind him. ‘We didn’t have enough time to establish ourselves,’ he says now. ‘Despite being a new party, we still did very well. Maybe, we will do even better in the next election.’ And, in any case, he still has his Rajya Sabha membership.
It is somehow typical of Vijay that even as his critics were dissecting the fiasco of his political career, the man himself was already on to the next big thing.When the aviation sector opened up, Vijay decided that he would run his own airline.
Kingfisher – he chose the brand as the airline’s name – has been through many avataars. An early version was planned as a low-cost airline and his PR people put it about that Vijay would be the Richard Branson of India, given his beard and his flamboyance. And just as Branson revolutionized travel across the Atlantic, so Vijay would offer low-cost but fashionable services to a new generation of travellers.
This was all very well, but somehow I always had difficulty in putting the phrases ‘Vijay Mallya’ and ‘low-cost’ into the same sentence. There is nothing low-cost about Vijay and I could not see how any extension of the Kingfisher brand could enter a budget segment without damaging the brand image.
My doubts were confirmed when Vijay began announcing his plans for the airline. Every seat would have a video screen. The airhostesses would all look like models. Four different designers would plan the interiors. Another set of designers would do the hostesses’ uniforms, and so on.
Now, Vijay professes irritation at the Branson parallels. ‘ I can’t understand how this started. I don’t want to be Richard Branson. I want to be Vijay Mallya.’ He denies also that Kingfisher was planned as a budget carrier. ‘ Look at me,’ he booms. ‘ Can you see me starting a budget airline?’
My point, exactly
It is too early to say how well Kingfisher will do. But Vijay has already demonstrated a shrewdness of touch by linking up with Indian Airlines for infrastructural services and he insists that despite the plethora of services, he is following a model that allows for higher margins on lower costs. My guess is that he has made a mistake by choosing an all-economy format. Given his own image (he is a brand ambassador for Kingfisher, remember?) he could have successfully launched a premium club class and made the kind of profits that Branson makes from Virgin Upper Class. But no doubt, Vijay’s people have crunched the numbers and know what they are doing.
When Virgin Atlantic took off, Branson sold off the music business that had first made him rich. Even if Kingfisher does become a huge success, I don’t think Vijay will part with the booze business that is the bedrock of his fortune. He has restructured his liquor companies and sold equity to such partners as South African Breweries (another round of restructuring to merge Shaw Wallace brands into United Spirits is currently in progress). But he is still a booze baron at heart.
Just how big a booze baron he is, can be underestimated.After he bought out Shaw Wallace’s liquor interests (two decades after he first tried to take over the company), his group is now the world’s second-largest liquor manufacturer after Diaego, the British-European conglomerate, which is itself the product of acquisitions and mergers.
His father would, I think, have been proud of him.His style is very different from Vittal’s but he has grown the empire to a level that nobody could ever have thought possible. And, he has done it in his own way, not giving a damn about what anybody says.
After all these years, the son has finally proved that he deserves his father’s approval.
‘Despite being a new party, we still did very well. Maybe, we will do even better in the next election.’
(Picture courtesy Hindustan Times)
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