In the middle of an unbelievably hot winter, the excitement of an India-West Indies test series, and the birth of a future eye candy came this shocker of a news.
The airline of good times, owned by the king of good times, Kingfisher Airlines, is..well, crashing. That too pretty fast. Because they can’t pay their pilots, their stewards, their stewardesses and their janitors. Hell, they can’t even pay for their fuel. As a result they can’t fly their planes, which is how they earn the money.
Having said that, I must admit I was the first person to be sad on hearing this, because I kind of have a soft corner for the airline. For Kingfisher Airlines
1. Was the first to introduce a T.V on an Indian domestic flight and
2. Was single-handedly responsible for increasing the quality of air hostesses in Indian Aviation.
I used to love the TV on board. In fact I used to prefer Kingfisher over the others, sod the cost, for that particular privilege. And to realize that the airline which had given so many fond memories was not going to fly made me very sad. But before I reached for my handkerchief to wipe off my tears, This came on the telly
Vijay Mallya wanted the Indian Government to save his airline.
When Vijay Mallya, the self anointed King Of Good Times, maker of India’s most expensive calender, asks the Government of India to bail him/his airline out it will be the headlines. For, after removing all the marketing gas and gloss, effectively meant the king was
Allah ke naam pe dede baba!
For our money, to save his airline.
Anybody else asking this favour on live television, we most probably would have forgotten all about it, switched over to India TV to watch the ground breaking coverage of an Alien UFO, sucking up a Cow from the face of the earth.
But when the guy asking for a bailout is this guy.
Vijay Mallya Google Image search Result 1
Vijay Mallya, Google Image Search result 2
VIjay Mallya, Google Image Search Result 3
Eyes will be raised. Hell, they will burst out of their sockets.
So the inevitable arguments followed with Arnab Goswami taking the lead on prime time TV and Suhel Seth vehemently playing the devils advocate, to save his friend. And after sometime, the man himself came on TV, speaking Oxfordian English, telling us that
1. Kingfisher Airlines is hale and hearty.
2. What he asked for is not a Bail Out, and how he is not Air India and will never ask the poor tax payer for his hard earned money to save his private airline.
And some more Mumbo Jumbo.
Basically selling us a load of nonsense that weighed as much as his yachit
And it is pretty heavy
For in reality
1. Kingfisher airlines is not in trouble. Saying Kingfisher airlines is in trouble is like saying Ra-One is just a bad movie. Kingfisher is right now at a stage, where being ‘in trouble’ would have actually been a good thing. It is actually having an existential crisis.
Figure this out
1. It has a total debt of Rs 7000 Crores or Rs 7000,00,00,000, even after about Rs 1400,00,00,000 was kind of written off last year.
2. On top of this seriously large debt, the airline made an operational loss of Rs 1027 Crore or Rs 1027,00,00,000 over the last year. And the loss since its inception in 2003, a small matter of Rs 5690 Crores or Rs 5690,00,00,000.
3. It owes a sum total of approximately 890 crores to all its fuel suppliers. The situation with the fuel is so bad that Indian Oil has put a Kingfisher on a Cash and Carry basis. This means, they have to pay Indian Oil for every drop of fuel, before it actually goes into their planes and not afterwards, as is the norm. BPCL and HPCL, the other two suppliers, have stopped supplying fuel completely. BPCL has even filed a court case against Kingfisher Airlines for recovery on unpaid dues of over Rs 250 Crores.
4. It owes the Airports Authority of India, undisclosed landing charges. Their cheque of Rs 151 crores to clear their past dues, apparently bounced. And in a harbinger of further trouble, both the Bangalore and the Hyderabad airports have decided to ask Kingfisher for landing charges before they allow the KF planes to land. And if they do not clear their dues by the end of this week….
5. It has absolutely no assets that it can sell or mortgage. All its aircraft are currently leased, speaking of which
6. Kingfisher had to return its 5 ATR aircraft, the mainstay of its short haul flights, to its lessors as it could not afford the lease amount. With that, the sum total of aircraft returns since 2009 due to non payment of rent, increased to a total of 19. Also further aircraft recalls by lessors were on the way due to rental defaults.
The inevitable had to happen. Kingfisher, owing to lack of fuel, pilots, landing space or all the three, arbitrarily cancelled over 200 Flights (And the list is growing by the millisecond) without as much as a sorry, inconveniencing thousands of Indian air travelers, dealing a mortal blow to its image of a 5 star airline.
So to sum it up, Kingfisher is in a trench that is rapidly approaching the Mariana in its depth. Who or what is the reason for all of this?
For anyone who says (Read the media and the man) this was due to the unfavourable combination of a hostile economic climate and high aviation fuel prices, please punch him/her in their faces. For Kingfisher is not down in the dumps because of those reasons. It has been pretty much in the dumps all this while. Kingfisher has been a loss making entity, since the day Mallya announced its launch in 2003. To put it in perspective, all his competitors, including the much maligned national carrier,Air India, were actually making profits, till as late as 2005-2006, while he sustained continuous losses.
So in one line, Kingfisher is an airline that is badly managed, has no assets to speak of (all their current Aircraft are leased and the ones they own are in an assembly line in Toulouse) and whose debts are mounting with every flight that either takes off or is cancelled.
And the man claims ‘all is well’ and as an ‘honest industrialist’ he will never ask for tax payers money. Why should he ask, when he in collusion with a particular minister with whom you will be introduced later in the post, surreptitiously has taken a lot of it anyway?
In fact he has not only gone after tax payer’s money, but also he has grabbed the money of the predominantly middle-class depositors who invested their savings in trusted public sector banks. I mean
Their money as well
And the money of a whole lot of bus drivers, school teachers and well, pretty much anyone who has an account in SBI or any of the following public and private sector banks that gave money to Mallya.
How did he pull it off? Read on
For this you, have to go back to 2010. As usual Mr Mallya was neck deep in trouble, with the banks circling around like vultures asking for the money that Kingfisher borrowed but could not or did not repay. So our man, decided to sit with the bankers, to ‘restructure’/reduce/waive off his debt. And the bankers obliged.
Kingfisher’s debt was reduced to Rs 6000 Crores,(type ‘debt recast’ in the find box) from the previous debt of Rs 8414 crores, when some of the debt was converted to equity. Banks took up a 23 percent stake in the Airline, with each Kingfisher Airline share being valued by the banks at Rs 64.48. The banks determined that 23 percent of the airline, at the above share price, was about Rs 1400 crores. This price was knocked off from the original debt. After that, both the bankers and Mallya went home happy and probably had a big party.
Drinks were on the house
However, there was one small problem.
Share price of Kingfisher Airlines, that day was, Rs 39.90.
This meant that, Mr Mallya was given an incredible premium of 61 percent premium per share in his failing company. Either he had a rocky balboa like business model, some influential friends, or Bodhidharmanish hypnotic powers or maybe all the three.
I am not particularly strong in Maths, but then a quick back of the envelope calculation shows that,
According to banks, 1400 crores of Kingfisher Airlines, represents 23.32 percent of the company when valued at Rs 64.48 per share. In reality however, a simple multiplication shows that, 23 percent of the company at that value is closer to around Rs 1000 crores, with the 400 crores being touted as the haircut taken by the banks. So the banks, which are under the control of the government of India, literally wrote off Rs 400 Crores, even after their generous calculation.
But, when you account for the real stock price at that time, which was Rs 39.90, 23 percent of the company was not Rs 1400 crores or Rs 1000 crores as determined by the banks.
It was, actually, somewhere close to Rs 461 Crores. The day the deal was signed, banks had decided to literally hand over Rs 1000 crores of depositor’s money to Vijay Mallya and his floundering airline. While Vijay Mallya claimed he had reduced his debt, which in essence was true, he had actually deprived the depositors and the banks of more than Rs 1000 crores.
The banks, to their defence, will say that as it is the price of a share and considering India’s potential in aviation, Rs 39 is a minor blip and the price will rise to its true value, which they determined as Rs 64, sooner rather than later.
It has been eight months since the deal was announced, and the highest stock price of Kingfisher in that period…Rs 48.85. Not once did it cross, the bank determined value. Not once.
As of today Kingfisher stock price has nosedived to Rs 23, rendering the value of the Kingfisher stocks that the banks have, to Rs 276 crores or so.
Vijay Mallya has swallowed, as of 21-Nov-2011, at least Rs 1200 crores of depositor’s money from various banks.
To put it in perspective,
1. Kanimozhi is in Jail for the last six months for accepting a bribe of Rs 200 crores.
2. Rajeev Gandhi, lost his government in 1989, for an inflation adjusted sum of Rs 950 crores.
And Vijay Mallya, well, You know where he is.
Add to the above straight up loss of Rs 1200 crores, the banks also reduced the interest rate of his left-over debt of about 7200 crores so that he could repay, as and when his lordship is willing. The exact figures of the reduction, I could not find, but when 1 percent of the amount represents 72 crores, it has to be pretty substantial.
And all this is depositor money, which translates to your money, my money and the money of pretty much anyone you will meet on the street.
And Vijay Mallya says, he has not taken and will never take tax-payers money.
However the fundamental question is, didn’t the banks realize that this is an almost insolvent if not a totally insolvent company they are dealing with? The facts were on the table, here was a company that has not made a profit since the day it was established. It has substantial unpaid bills in almost every sphere of its operations. Its debt was rising every day. And the global outlook on the aviation sector in general has been negative for the last few years.
So how could the bankers not only give Kingfisher Airlines a breather in its debts, but give it at an unheard of 60 percent premium guarenteed to cause them huge losses in both short and long term? Didn’t they realize it was not their ‘baap ka maal’ they were playing with?
At this point I can only speculate, but I am sure the decision was not Bank’s alone. I guess some higher power had to do with their largesse. Something akin to the
I give an order that you cannot refuse
I can only point you in the general direction of the man. He is a politician and before joining Indian politics, made his living by manufacturing Beedis. He is in fact India’s largest beedi maker, by a distance.
India’s no 1 beedi brand, Monkey Boy
Just to give you a heads up on the man, let me quote one instance
Beedi’s are the considered the AK-47’s of the tobacco world. Though everyone assumes nuclear missiles are the weapons of mass destruction, it is the humble AK -47 assault rifle that is the real WMD. It is inconspicuous, easily available, very cheap and has killed more people in more countries than nuclear weapons ever can.
Similarly, a beedi is ten times cheaper, and going by the World Health Organization and Voluntary Health Association of India, it is smoked by eight times as many people who smoke cigarettes. Also according to them, the deaths caused due to beedis are more than the deaths caused due to the other tobacco products combined.
But when in 2010, Health Ministry decided to put pictorial warnings on tobacco products to warn people of their dangers, Beedi’s were miraculously exempted from necessary rule.
You don’t need to guess why that happened.
But what has this got to do with Vijay Mallya? Well turns out a lot
When Vijay Mallya’s Kingfisher Airlines flew its first flight on 9th May 2005, Kingfisher was ranked at number six in the pantheon of Indian Aviation, while Indian Airlines was in the second position, with Jet Airways at number one. Instead of concentrating on making his airline better, Mallya decided to push others out of the way in his quest for glory.
And he had a lot of help in doing that.
First obstacle, Capt C.R Gopinath, pioneer of low cost aviation and e-commerce in India and the guy responsible for the maximum number of first time fliers in India. Formidable force.
‘The Man’ of Indian Aviation
1. He does not get landing space and hangar facilities in major airports.
2. Further permits to fly on profitable routes are denied.
All on orders from his guardian angel.
For added effect, Mallya unleashed a media barrage, targeting his airline labelling it a ”Flying Udupi Restaurant’ even when Air Deccan was making more money and carrying more passengers than Kingfisher.
Capt Gopinath saw the writing on the wall and sold out to Vijay Mallya.
Obstacle 1, obliterated.
While this was happening, Subroto Roy Sahara, owner of Air Sahara, then the fourth largest operator also wanted to sell out. So, Vijay Mallya got into a bidding war for that heavily loss making and debt ridden airline, and using the Parthiban-Vadivelu auction strategy inflated the price for his competitor, the no 1 airline at that time. They fell for it and bought the airline at a price unanimously considered as too much.
Obstacle 2 dispatched, or that is what he thought.
And what happened to Vijay Mallya and Subroto Roy Sahara
Six Years later
However the most difficult competitor still remained Indian Airlines and Air India.
In 2007, Indian Airlines had a pittance of a loss of Rs 280 Crores. I say pittance because at the same time Mallya was seeing losses of Rs 480 Crores or so. And also, Indian Airlines had achieved profitability of over 90 percent of its routes and remaining 10 percent of the routes were on its way to green. So it was well on its way towards overall profitability. And Air India, was a actually a profitable airline.
And then the intervention happened
Completely disregarding the existing systems, policies and patterns of both the airlines, the powers that be, decided to merge IA and AI, ostensibly to increase their efficiency and allow it to enter the global Star Alliance. This according to them was the panacea for the non-existent ills of the national carriers. Why Star alliance only and why couldn’t Indian Airlines and Air India be members of that damned alliance on their own terms were trivialities that were not answered.
So suddenly, one loss making airline on its way to profitability and one just about profitable airline suddenly became one huge loss making airline. And this in spite of vehement opposition from the management of both the constituent airlines.
And to deliver the coup-de-grace to the shaken airline, the powers ordered a MIND BOGGLING 111 AIRCRAFT IN ONE GO. Yes a total of 111, that too at a mind boggling cost of Rs 32,000 crores. For apparently enhancing its operational capability.
This when the management of Air India and Indian Airlines, the ultimate end users of the aircraft, had requested a sum total of 67 aircraft.
The inevitable had to happen. When your annual turnover is about Rs 7000 crore, how do you pay for aircraft worth Rs 32,000 Crores? You take a big loan, for which there is a big interest, Rs 6000 crore a year big.
What started as a loss of Rs 180 crore with a negligible debt, the new company suddenly had debts worth Rs 40,000 crores for which interest was mounting every day.
Main competitor taken care of.
Three competitors, vapourized
It did not stop with that. Indian Airlines had specifically requested for Airbus A 340 planes, which were wide bodied and had a reliable delivery schedule. This was specifically mentioned in their requestion for new aircraft.
‘Indian Airlines, need 43 A 340-300 aircraft for their operations’ was the statement by their management. Unfortunately the statement was so unclear and complicated, that the powers to be just
And without any prior intimation or consultation, straight up changed the Request for Proposal (RFP).
So, the original requirement mandated that the new aircraft should seat six abreast which rendered both Boeing and Airbus eligible. This inexplicably was tweaked, with the new guidelines mandating the aircraft to seat nine abreast. As a result, Airbus was ruled out and Boeing suddenly was the only one in the race.
Also perhaps, in the RFP was a clause, that the aircraft should take as much time as possible for delivery. For the date on which I am writing, not one of the new aircraft from Boeing has been delivered, three years since the planes were ordered. All this while the debt incurred to buy them keeps accumulating day after day for Air India.
Air India was not being killed. It was being simultaneously poisoned, strangulated and stabbed. What more could one do to kill, what was once considered the national pride?
Turns out, a lot more.
The powers now started meddling with Air India’s routes, to explicitly benefit Mallya and Kingfisher.
What the hastily arranged merger of the airlines, achieved was it had a direct effect on the agreements that the Indian Government has with foreign countries. For example, the agreement with Singapore allows a maximum of two Indian Carriers to fly at most 32 flights. The roles were being fulfilled by Air India and Indian Airlines, each flying 16 routes at about 90 percent capacity.
With both of them now being merged as one, it suddenly became one airline, opening the space for another airline to start flying to Singapore. And to enable that airline, the powers cut down 16 routes of the 32 flown by national carriers, so that the new airline join this highly profitable routes party immediately. You don’t need to be Einstein to figure out who filled in. In all, 16 profitable routes were lost to Kingfisher.
And while Air India continued to fly to Singapore, some domestic routes of Air India were cancelled outright, without as much as an explanation apart from ‘we need to cut loss making routes’ rigmarole.. And mind you, many of these routes had over 90 percent occupancies.
And exactly one week after these ‘loss making’ routes were cancelled, Kingfisher started operations on the same freaking routes.
Like the Mumbai-Vadodara: 90 percent load factor. Cancelled by Air India, patronized by Kingfisher
Kolkata- Bangkok- 90 percent load factor. Cancelled by Air India, Patronized again by Kingfisher
And also why does Air India, most of the times, have the most expensive tickets for peak flight timings,
Like here, here, here and here as well.
So to summarize
Excess Aircraft: Loss of Public money
Unnecessary Debt and resultant interest: Loss of Public money
Loss of Revenue because of arbitrary route cancellations and excessive pricing: Loss of Public money
All this was done to favour Mallya.
And Mallya claims he has not touched a paisa from the public.
In fact at the Air India inquisition, this was what a ruling cabinet minister had to say and I quote. “Reasons for going ahead with huge purchases by the civil aviation ministry despite Air India and Indian Airlines not having the capacity to support it, remain unknown to the Committee. It, therefore, recommends that this aspect needs to be further probed to fix the responsibility for taking such an ambitious decision that has become a big financial liability.”
When the Congress government starts pointing at you for corruption, you must have done something wrong.
It was Vijay Mallya’s strategy to drive everybody else to the ground, so that he could have a monopoly over air transport in India. And he had a faithful and willing ally at the peak of the aviation power pyramid, who did his bidding. It was as if, there was a grand plan to drive Air India to the ground, put it up for distress sale so that the leading bid could come from. You guessed it, Vijay Mallya.
What they did not account for was Mallya going belly up before that happens.
The systematic destruction of Air India and the Kingfisher bailout, should not be viewed in isolation. Both are closely related to each other. Mallya entered aviation, knowing fully well he had his friends in the seat of power. While they meddled with the Air India so that Mallya benefits, he grossly mis-managed his airline knowing fully well, come what may, he will somehow be saved in the end. With the Government ‘considering’ the bail out/loan/capital infusion application of Kingfisher, he might well be vindicated in his belief.
Scam Flowchart : For Future Reference
Whatever way Mallya would like to dress it, if given, it will be a bailout. For the simple reason that, there is no way, under normal circumstances in the financial universe that the banks will lend money to a company in a state that Kingfisher is in. Everything that Kingfisher is today flies in the face of conventional lending norms. In fact it ticks all the boxes that a bank will check, for going as far away from the company as possible
Huge existing debt : Check
Weak outlook for the entire industry: Check
No significant assets: Double Check
Consistent losses: Triple Check
Truth be told, Mallya does not need a bail out. It will be a travesty if he is ever given one. Forget a bail out, all his debts should now be recovered on a priority basis, lest he pulls a Houdini and runs off somewhere. If he cannot pay, which I am sure he cannot, the government has to
1. Sell every asset of Kingfisher, or whatever is left (Whatever it has in terms of landing rights, Parking spaces etc etc)
if that does not suffice
2. They should confiscate his expensive collection of vintage cars
and if that does not suffice
3. Sell off his prime properties that he owns in UB City in Bangalore.
If that happens, no other tycoon will then take the Indian public or the government for granted and dare to mismanage their business with the belief that the government, with some inside help, will bail them out.
As of today, the total debt of Kingfisher, including pending fuel bills, landing charges, lease rentals totals to around Rs 10,000 crore and its total Market Capitalization is around Rs 1,220 crores.
Kingfisher’s debt, today is approximately 1000 percent of Kingfisher’s market capitalization. Which means, Even If I sell, all of Kingfisher’s shares, I will still have to about Rs 9000 crores of its debt left to be reclaimed.
Do the banks still think Kingfisher will get their money back?
I will go on a cruise liner, sharing the president’s suite with Scarlett Johansson and Jessica Alba before that happens.
1. The weakening of Air India, also benefited other private airlines and some foreign carriers. No word is said about them because they did not go to the government with a begging bowl.
2. The financial calculations are approximate.
For some fascinating insights on the Air India scam, i redirect you to this amazingly informative piece.
And here are the entire transcripts of the Radia Tapes on the systematic destruction of Air India.
Updated on 04 February 2011:
As one eagle eyed reader pointed to out, the article originally stated that Kingfisher’s market capitalization was 12000 crores, which was wrong. The market capitalization is actually 1200 Crores.
The error happened as a result of a mistake in the conversion from American billions to Indian crores. I am really sorry for the mistake. The correction has been made and the article amended to reflect the same.
Frickin’ awesome write-up, buddy. We should ask those *$$-h01e5 “Why this kolaveri.. ” against the “mango man – aam admi”?
IMO – we’ve seen this repeated the world-over & India is no different. Once you have a federal / central government that pokes its nose into Economics & Social Welfare – we’re doomed.
Like I said elsewhere in a different comments section: It’s taken us human beings centuries (if not more) to figure out that we ought to separate the state from religion; it might just take us many more centuries to figure out that we ought to separate state from, A) Economics & B) Social Welfare.
The reason that we have (& will continue to have) more & more influential business-elites game the system is really simple: either they game it to their advantage or their competition pushes them out of business. In your above story, Capt Gopinath didn’t have the influence to game the system enough to save his airline: he got pushed out.
Having said that, we need to recognize that the free market force is much more persistent, consistent & potent that all of the world governments (& the international governance agencies like UN, WTO, etc) put together. These forces will break the backs of the fools that game the system & these invisible forces will never stop until the morons stop gaming the system.
Imagine, if the Civil Aviation & other such departments were never part of the politicians & bureaucrats power-structure – will the “beedi king” have had a chance to game the system? Power corrupts & absolute power absolutely corrupts. So, all these communist & socialist stupidities are set for failure from the word go – because power is concentrated with the small set of oligarchs (1% of the population – tops).
No country can ever have a bunch of central politicians and/or regulators that will have so much power & remain infallible for eternity – it’s just not possible. Like they say in Hindi “na rahega baas, na bajegi basuri”.
But, it was under the same bureaucratic setup that Air India and Indian Airlines were thriving till about 2005-2006. I will not loop all of them under one umbrella, but yes there are many bad sheep.
My primary grouse is the apathy shown by the media towards this. Here you have a politician and an industrialist, shamelessly ripping off the Indian public, and the media treats him with kid gloves. However, when Air India was in the same situation for no fault of theirs, all the media asks is
‘SHOULD AIR INDIA SURVIVE’?
AFAIK, not one person questioned on the 61 percent premium given by the banks to kingfisher. Not one media anchor asked about the debt that has been waived off. And now the share price of Kingfisher is in the lower 20s, no one has asks about the massive loss to the banks. Why this bias?
Dude.. no doubt the facts you have stated are shocking and true, the way you have put this together is awesome.. keep writing more of this sort.. I really enjoyed reading each letter of the content.. way to go…
what ever you say or the damn world talks about king fisher , the low cost airline has definately allowed people like thelawalas , carpenters plumbers and rickshaw pullers on flights who would misbehave with the crew!! first time flyers inc.!!!! sure as certain i guess dr mallya has the moolah to get out of this crisis which he has made !!
and we all great citizens keep quiet when we know that we pay up almost 40% towards the stupid taxes per litre of petrol now who is making a fool of us this stupid govt????
In what universe is Kingfisher low cost????
This entire story does not concern the losses incurred or a crisis which has to be looked after by vijay mallya… This is about how strategically and selfishly Mr Mallya is trying or rather i would say has succeeded in Putting Public money into Vain by unscrupulous policies he has made with the former minister Praful Patel to put each and every other domestic/indian origin-ed carrier out of the race and make his way to the monopoly airline business down the lane. And All of this has been done on none of his own expense, banks are giving him all the loans he wants because they know that they will surely recover the money in the coming few years when the airline stands alone as the market leader in the aviation industry…..
KIngfisher airlines has stubbornly remained upmarket. Where did you get the impression that it’s low cost? Probably you are confusing Deccan airlines with kingfisher.
Extra-Ordinary Present of Facts.. This issue must settle soon either KF there in AVIATION industry with services they given taste to India or Out form the GAME soon. Thanks for consolidation.. Great Job.
Really happy that you found it useful
Thanks a lot for your encouragement
This blog must go to all Indians
That is up to you to spread the word
i jus read this yesterday n i must say that u hav written an awesome article here, n when i wake up in da morning n read the newspaper, was shocked to see dat yet again SBI has given a loan of 1650 cr. !!!
on what grounds man? are the banks getting crates of Kingfisher Ultras n premiums? how can the bank being govt. controlled go ahead n give such a loan to an entity which can virtually not be able to repay it back!!!
KS, u hav done a very good job, n we’ll help spread da word man…!
i wonder when Shiva’s third eye will open!!
Great reporting and analysis.
Well researched…though too many numbers and facts towards the end. In fact, while reading through some of the facts, I got the feeling of “says who?” and I wanted to know the source of the stated facts and hence the credibility. Since, its all money, source of info is very important for me. Else, the point you want to make is very clear and written in a good flow. Loved the bullets and numbering fact and nice pictures to demonstrate the rest. Pictures definitely speaks a thousand words here….though long, it was interesting.
Thanks a lot for your kind words. Even I realized it was kind of long, but you know it was longer than this when I first wrote it. So what you are seeing is the truncated version. Also can you please tell me, where all in the blog, did you get this feeling of ‘who says so’? If you point it out, I will definitely add sources for the same.
I would love to read the longer version, how do I get that?
Well researched piece and an interesting read. You made your point very clear. Though a long pice, it was a good read.
P.S: loved the demo through pics. Pics definitely speak a thousand words in your blog.
Since your piece is completely based on money, its value and a lot of monetary facts, at some places, I got the feeling of ‘says who’? I wanted to confirm the credibility of the data and the source of the data taht you have stated.
It would have been more interesting, if you could have mentioned the source of info, wherever you have talked of embezzlements.
A Lot of info… Thanks for reporting this!! I hate this @#!@#$ Con-gross more and more everyday!
Shesha – Nice, Very Nice. I think we understood a lot about Federal reserve act through the zietgeist movie. We would have still understood the same even if we had read about the events, but IMPACT was really huge in the visual media. After reading this and to really spread these kind of analysis to our facebook junta’s. You (We) need to present the same content in a short film type with better sound effects, music mix etc like zietgiest. Just thought so, think of it. Think of ways to work out and improvising the idea of spreading the news in more of visual than reading. Very few people might find intresting to read a long article. If the same would have been a 5 mins film , it would have been another kolaveri di 🙂
U are tottaly on the ball boss.. But my artistic and creative talents are worse than that of a blind porcupine. So if I make a movie, it will be more of a plan 9 from outer space 🙂 (look it up) than a kolaveri…However, I am trying another investigative piece, so will try that as well…
Actually u r more creative and talented !! anyone who see those pics and flowchart in this particular article will accept my view. You dont need to do it ur self, check if you have any friends who can handle the technical part of it or find someone and you can take care of execution part and how the final product should come out. It could be very simple, but should convey the message strongly ! Just an idea- keep it with u. when the time and opportunity comes you can use that. Till then continue the good work with more pics and graphs and less words and as crisp as possible. Just to get more attention and readers 🙂 ( though i prefer reading a very big article )
dont know anything about the reliability of the arguments put fwd in the blog…but this can really serve as a good script….and if the article is really true…god knws where this country is heading to…
brilliant….so what are we really gonna do about it ???
well….I have a very short attention span, I have been very bad at reading history stuff.
But.. I read this and other article ( four events… part 1 and 2) at a stretch.
So, you are a talented writer.. ( don’t tell me that I am a mere gossip monger :D, as I can’t read anything that can’t be presented in form of maths/scientific facts)
Or perhaps you are very talented at creating a gossip out of facts 😉
Great read.. only thing I’d like to point out is that you haven’t given references for all the figures and names that appear.. too bad the bulk of the people will never take the time to read till the end..
Please tell me where do you need figures. I will add them pronto
I read till the end. And not only that, I have read this blog more than once. Cheers
Great write up and very good observations made. However, one small comment. You have mentioned KFA market cap to be 12,000 crore. My best guess is that it cannot be more than $250 million or 1250 crores as of today. Even in Nov 11, their market cap was not more than $500 million. Their networth is negative; it is so bad that due KFA, networth of UBHL has become negative. You may want to check on this. Cheers
I will check my figures and will make the necessary corrections if any… And thanks for the appreciation 🙂
You are absolutely right, I have made the necessary corrections. It was a result of my erraneous conversion of billions to crores.
Thanks for pointing it out Sir. I am really grateful. Hope you don’t hold it against me. 🙂
Thanks a lot for your time, appreciate it. I have noticed too that these days people in India are talking in Billions and not crores. It confuses me as well. 🙂
Hello. You may want to check out the “Debt recast” section on this page. http://en.wikipedia.org/wiki/Kingfisher_airlines#Debt_Recast
It talks about the DRP & GDR in detail. Actually, numbers are even higher. Cheers
Brilliant Read !
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I noticed that you changed the market cap, thanks for this (why I say thanks is that your blog is becoming a National Treasure now). I just ran some numbers here is what I found.
In Dec 2007, KFA had 135,762,603 outstanding shares. Monthly share price was 286 (weighted average) and exchange rate was 39.4. With this their Market Cap was $986 million (highest ever).
In Nov 2008, KFA had 265,908,883 outstanding shares. Monthly share price was 29 (weighted average) and exchange rate was 48.8. With this their Market Cap was $155 million (lowest ever).
In Feb 2012, KFA has 497,779,223 outstanding shares. Monthly share price (MTD) is 28 (weighted average) and exchange rate is 49.2. With this their current Market Cap is $287 million i.e. 1,411 crores. Now the question is how can a company (worth 1,411 crores) raise $850 million (as speculated by analysts) for required funds to stay afloat? One cannot sell or give more than he has? Right. Hope you find this useful. Cheers
p.s. Links to above data
Shareholding: http://www.bseindia.com/shareholding/searchresult.asp?scripcd=532747&scripname=KINGFISHER AIRLINES LTD.
Share price: http://www.bseindia.com/stockinfo/stockprc.aspx
Exchange rate: http://www.x-rates.com/d/INR/USD/hist2012.html
Well written KS!!! the scheme… the loot… all put in perspective… All the very best and do write more…!
Excellent expose of the Corporate Politician nexus. Though generally it is well known but gathering evidence and linking it all up is a painful task necessitating long hard work and courage. My compliments also on your nationalist spirit.
Excellent work Sir. Truly appreciate.
Hats off to the author for the excellent debrifed case …
Check this out.
WHAT EVER IT MAY BE I ENJOYED THIS FLIGHT FROM BANGALORE TO LONDON AND BACK WHICH I REALY ENJOYED ALOT KINGFISHER SHOULD FLY AGAIN AT ANY COST
Yo Muralidharan why don’t you lend money to Mallya to keep it flying then? At any cost it seems. Joker.
AT WHAT COST MR. MURALIDHARAN?
Loved it…even though I was outraged by how gullible we are and how much we are willing to put up with! Please keep up the good work!
Great! why no media or political party exposed it?
serendipity at its best.. brilliant blog and work..amazing articles..just read a few and already a huge fan..pls keep it up and gr8 job
excellent and very informative article. Events did not just happen they were created with utmost precision and conveniently with the AI/IA managements ,boards and the Godly GOM to make it look a foolproof unanimous decision.
Poison Air India Affair:-
1. At Mumbai’s erstwhile Indian Airlines Domestic Terminal, the Executive Lounge next to check-in counters is usurped by KF. IA is sent to Basement level. Only a staircase with-out any lift facility prevents IA passengers carrying hand baggage to use it.
2. After the Vadodara sector pullout by Indian Airlines, a BRD-BOM normal fare of around Rs.3000/-(earlier 1700/- by Deccan) is charged in 4 figures FOR EVENING flt. It is a JET monopoly .
It should not surprise anyone that decisions for Indian Airlines and Air India were taken by a Group of Empowered Secretaries, and a Group of Empowered Ministers, and not the “beedi King”. It is entirely another matter that Soniaji and Manmohanji themselves came to beedi king’s constituency and campaigned. Huge money was spent, but tracks covered up well. Give credit to him, unlike the illerate ones who are getting caught.
Amazing research very interesting this is a big scam and in few pages it can not be disclosed everything as you know some of the reports are 1000 pages long. Each and every point you have covered are very good.
I am sure you know who are Vijay Mallya’s supporters in the governments. But do not wish to disclose those names.
Some how i think all bad apples and those dirty politicians and corrupt businessman should be exposed.
Good work and congratulations.
Good read and informative, though I would like to point out a few things:
1. Banks restructure coz there is no way out. Its a choice between Mallya declaring banruptcy and banks losing all their money or restructuring so that at least some money can be recovered if the airline survives.
2. Banks giving loan is dependent on the credit rating of the airline. If Mallya was paying his debts n dues before on time(before the current crisis) then his credit rating would have been excellent and the banks would have had no problems in giving loan. Yes, the banks should have done a feasibility study of the airline and the viability of its cash flows. So the main question should be: Why did the banks not do viability/feasibility study?
3.Converting to equity at a premium during restructuring was ridiculous. Banks should have done their own independent valuation of the airline and not gone by the market price of the shares.
The investors in PSU banks are hurt most, as are the taxpayers. The burden of slick operations, the well thought out parties, the flow of liquor to irport managers for parking bays and slots … the list is endless….YET at what cost
Amazing amazing article sir! The common man has no clue about any of this murk that gets orchestrated by the higher echelons of power! Such an eye opener and after reading this, one wonders, how the hell does the govt still get conned & why the hell is KF being bailed out?! I don’t think anybody would disagree with you on Mallya selling himself & his amassed wealth first! Alas that probably (that’s the optimist in me talking) won’t happen. Thank you for a remarkable read! Kudos!
Superb! Well researched and well written! Articles for these empower people like me who’d like to expose Corporate socialism while Capitalism is served to the poor! It’s an eye-opener to all those who think their taxes are wasted on “populist” schemes like feeding the poor or spending it on public Education. Thanks for the article KS
Vry Vry Good……Eye opener for all of us…..This article must reach evryone,,,,
But, After all this….what all of us(Common Man), should do to prevent KF from attaining its goal….Any thinking??????
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Brilliant article. One of the best pieces I have ever read.
That was just Awsome Article…
A Lot of info… Thanks for reporting this!
Stopping being ridiculous. You should have probably changed the sequence of reasons for the soft corner for KF. Yes it created the standard for flights in India, as before that no body thought being served international standards in domestic routes. How can you forget to google that it was mallay who saved our country’s dignity by bringing in Gandhi’s / Tipu’s remains? He is the one who has brought India in F1 circuit.
Yes he lives life king size and those who are jealous of this are the one cribbing over it. Haven’t you heard of Bank of America, AIG, Barclays filling for bankruptcy ?Do you think these banks were living under austerity all their life?
As said, It’s easy to throw mud at someone but difficult to support or appreciate a person.
Amit, All middle class people are not saving money to make some king and bring F1 circuit to india.
LOL Amit your comment is totally ridiculous ! Country’s dignity by bringing Gandhi’s remains? It was his spectacles and some articles dude not his remains. Btw those articles are still with Mallya not for Indians to view. The irony Gandhi fought against alcohol and a booze baron buys his stuff is another matter. And it was Tippu’s sword. Mallya is an antique collector and these belong to him. It is difficult to appreciate Mallya for the reasons mentioned in this blog. So you need a reality check and stop talking about other bankruptcies and philanderers ..
Amit don’t be a moron. Mallya is an antique collector and he has done this for his private collection and not for any patriotic feelings as the valuation of these items will fetch him more than what he had spent.
Force India has no force left to paddle it as Subroto is already going to be closing his NBFC .
What kind of appreciation are you seeking out for VM ? The flights when he started were better but now are as good as IA flights.
just incredible !!!
WOW. An awesome piece of writing.
WHERE DID ALL THE MONEY GO??
Great read on many fronts in a layman’s language KS! All that glitter(KFA) is not gold. I am wondering when there are so many other profitable businesses what makes the airline business tick? The Glamour? babes? beer? And why is there no system in place to stop this?The disastrous thing is that the entire foundation of the system of belief is shaken. For eg : Do I believe the Banks? The politicians? or The (inflated) company balance sheets if I am an investor?
Where did all the money , the premiums, the,profits the waive offs go? Is there a secret billionaire in the making?
Awesome piece of work… great research on figures and facts… good one
Great Work Buddy … First Time I Read An Article That Long 😛 But Pictures N Facts Make It More Intersting Nt Sure Abt The Figures…. Shocked To C That Scam Of This Level Is Nt Reported By The Media… Hw Many Such Things May Be Happening In Other Fields Too?? Soon INDIA Ill Become The CAPITAL Of CORRUPTION… Ill Try To Spead It As Much As I Can…. Keep Up The Good Work…. 🙂
WOW a real eye opener!! read it till the end!! good job, am sharing, cheers…
You must be a financial professional. 🙂 Cheers
With our nation’s debt at such high levels and inflation happening, how can we dare throw all our cash reserves in a pit fire like this?
For the record, it was Damania Airways and ModiLuft which brought excellence in in-flight crew and service to the Indian skies, long before Kingfisher Airlines was uncorked. Then Jet became the standard. If you’re talking about calendar girls, perhaps KFA was the pioneer there.
A great article kaipullai! Shared on FB! Yes, the apathy shown by the media is ridiculous, but the media content itself is governed by corporate people who are in turn hand in gloves with the corrupt clowns at the top. The worrying thing for me is not even one individual among these people was brave enough to stop such a scam from unfolding. Dude, you need to be a reporter for one of the big media companies, but no wait, such articles which expose the innate fallibility of the govt. will never make it to the front pages. I say the govt. because this Mallya is a comparatively powerless guy who just happens to know a lot of powerful ( and insanely corrupt) people. We as a country are shooting ourselves in the foot. The road to recovery is a long one but not impossible. But as long as such inept fools who only care about their own wealth are at the top, the recovery is stalled. I say the banks stop helping him, let him pay out the debts out of his own wealth and cancel all those pending orders. For an educational loan, these banks make us run around like dogs asking document after document for security purposes and bribes just to get the work done while here Mr. Mallya gets a free ride with a failing company as his security. Its a joke! All these “learned” people need to get their head checked. Aargh, nearly 65 years gone and the govt. still vandalizes our country. Only difference is now the govt. is “elected” by us.
Keep up the wonderful work kaipullai!
I don’t know what to say. Crony capitalism has destroyed this country since socialism quit this country. I really can’t blame Mallya for being in bed with the politician. Remember Ratan Tata’s misadventures in the airline sector and the purchase of VSNL? He wasn’t in bed with the politicians. The aviation sector in India like infrastructure is politically sensitive. Any investor worth his salt knows that politically sensitive sectors are never to be touched with a barge pole. In India you need to be with the politician to derisk your business. This is because of adhoc policy measures and the lack of a well defined policy framework (read reforms). Coupled with the presence of whose-father-what-goes PSUs every industrialist worth his salt from the Ruias to the Mittals to the Mallyas. All of this bullS**t would have not happened if the politician who is always born out of the anus of a skunk could not tinker with the policy framework, and every policy decision in the avaiation sector was decided by an EGoM rather than a singly union minister of aviation. That would have been a better option. Now Sonia Gandhi has finally woken up and has started clipping wings of Union Ministers by removing their ad hoc powers. This should have been done earlier. I don’t think KFA will live long. Even the foreign airlines don’t want to touch it. Soon it will be taken over by another airline. This is its destiny. Eventually every airline will have to operate like Ryan Air in Europe.
Great compilation of facts. Amazing article. Impressed by the presentation. Keep up the good work.
Please can u write about the DIAL scam waiting in the wings by the same Beedi boy !!
Reblogged this on reflections.
never read anything better than this, to put everything in such a seq. manner requires lot of research, knowledge and guts. would like to know the names of politicians involved in this robbery of tax payers money?
freaking awesome dude!!! keep it up… can’t you also put few more on some politicians… i.e. Sharad Pawar, Krupa singh….!!!
Excellent write – up !!
Is siddarth mallya reading this?
Banks very well know that they can give loan only against proper collateral, that is property / jewellery / shares of A group companies etc. That is what they do with the aam aadmi. They gave so much money to kingfisher because a good 50 percent kick back was received. Why did they not take his liquer brands as collateral ? There were some private investors in Kingfisher who did this. Mallaya himself said this.
A company who’s has no assets, insane debt, poor future (airline business is very sick at the moment) and has never had profits, only a fool will lend money here, unless it is someone else’s money and a good 50 percent kickback is received offshore + fancy women are supplied to them at fancy parties.
A real eye opener…..Will share it for sure….
awesome info 🙂 thanks
I read two pages, then scrolling down and down, and down, I was amazed that anyone can write like this.
Before I finish reading, let me appreciate it.
superb. Loved that begging bowl !
After reading , fully, I will comment again.:-)
Superb. This is what people doubted all along. And the media is so humble! We deserve all this and more.
Thank you for putting this information in the public domain.
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Very well written…..for lesser mortals like me…..this explains the complete scenario with underlying facts….Thanks a lot and keep rolling such articles…..
Beautifully written and well referenced article.
Bull shit article, Mallya might own different companies and cars and properties and yachts but each of his business… one of it is not doing well doesn’t give any legal right for anybody to take away his personal property, assets or his other companies…
Nobody will start his business in this country if that is done. And contributing everything bad in the industry to Mallya is also pure fiction… A lot of it might be true, but allegations without proof.. are well just fiction.. and proof should not be links to cleartrip or google image results but something which can stand in Indian courts…
Makes a good read and entertainment for the casual user.. but this article has nothing intellectual and not meant to be taken seriously.. It is like the ‘Dabangg’ of bollywood… read, enjoy and have a good laugh!!
SBI shares and those of PSUs were collapsing because of such and otehr non-performing assets. Huge valuation is lost ot the small investors and the public
Great work. Well researched.. I am going to share it to as many as possible. keep up the good work friend.
I believe Ness Wadia and Indigo also had a role to play in the demise of Indian Airlines, I have reliable insider sources that tell me this. If you see the biggest beneficiary at the end of the day, it’s Indigo.
How does an Aviation Minister influence the Banks? He has no control over the Banks. Were the Beedi Maker in control of the nationalised banks
Well thought, well researched,
if you would research how Srilankan airlines had been given the most preferred airline to fly to India, you may stumble on another scam. While emirates was about to be given the preferred airline status, there was a huge cry on security owing to many Pakistanis working on emirates rolls. Eventually the then Aviation minister and government has decided to give it to Srilankan airlines only to be followed by emirates buying a 40% stake and management rights of Srilankan Airlines….
Could you please NOT call a 3-month old baby girl ‘eye candy’? It’s a very sexual, objectifying reference at the best of times and infinitely creepy when applied to a child.
Well.. here is a solution..
Very nice. I have scanned through it and have bookmarked it for later to read through it in details. I also am upset about the fact that a middle class man like me us given so much troube if he s not able to make the repayments, on the other hand people like Vijay Mallya are given even more money when they are not able to repay.
Have just posted on my blog the same thing. Have a look http://www.picturejockey.com/pblog/2012/2/kingfisher.html
Someone should a documentary about this. It is absolutely required. Get in touch with some small indie filmmakers. More people should know about this.
Nice great article with great research . I had put up a nice kingfisher analysis on my blog way before all this started to come on TV . here http://amitkumarblog.wordpress.com/2011/10/18/would-you-invest-in-this-company-indian-bankers-love-it/
This is really insightful!
What a wonderfully researched piece. Many congratulations to you KV. Hope that this will be read by many, especially those who matter. The funniest thing that you made me realise is that at least two of the banks that hold my cash are involved. And to think that I did not know that I was part of the millions whom the great Mallya has scammed! It’s strange that nobody in the corporate media could come out with a piece like this or is it?! BTW, are the two Patels related?! This nexus between corporations and the government is the most frightening thing ever. Is there hope for our country? I wonder and shudder at the fate of the “aam aadmi” whose voice you have chosen to be. May your tribe increase.
What an insightful writing, hope this article comes in hindu or TOI or something !
I got very unsettled when i read this. if all these are in the public domain, what is being done about it? Is anyone thinking of punishing the Minister? why should only Raja be imprisoned when this MahaRaja of scams is scot free? I read the other links also and listened to the tapes. I only have a feeling of helplessness. I feel like a complete idiot on being educated by your lovely investigative piece because of how everyone is being ripped off our hard earned money by these incompetent ministers.
This is simbly brilliant i say!…. kaipullai alias KV I’m officially a fan of yours from today!!
Loved the similes… specially the vadivelu-parthiban one!!!
ps:- keep opening our eyes and much more (lol) though your insightful and entertaining blogs!
Hats off for the bold and insightful writeup…Please bring out more such cases where the Establishment has links with Corporate & Policies are framed meticulosuly.
Wish to get a peep on the Ambanis as well.
Hats of to the writer…and shameful for our entire system….but still nothing is gonna be done….really a pathetic situation….the authorities have chosen to keep sleeping….
great article n very nicely structured. But i really don’t understand if Mallaya waste money how did he blow out such big amt bec. for any business u have labour, land & Mach cost & profit. But going by ur logic i understand he is not paying labour much, Cost of Mach. shd be kind of same, or bit high no profit. So where is the money gone that the question i have because if air india is loss than profit to KS so if he doesn’t pay the employee, bills it’s own loss..U have stated that market cap is around 1200 but loss of 12000 that 10 times almost so he as to purchase or sale something at 5-8times more or less right. Hope to get light on this u being expert. But surely there is something fish and this congress govt. is main reason. we can c it in every field. Like in 80 it happened in defence, 90 in Mines and industries, 2000-10 in aviation, telecom etc. Hope u write something on this areas for also for our knowledge..
Well done great job we can only share this kind of information.
If you contest elections, pls let me know. I’ll vote for you.
I am not sure whether the Singapore issue is accurate. Kingfisher has started operating only in the last 1 or 2 years. It is Jet Airways that has been operating since the last 4, 5 years.
Good article..got all right inputs..Thats the power of corporate lobby which sits on top of everything in India..The corporate lobby is more powerful than the state ,central governments ,supreme court and media. They have control over everything in India..the media and government will take us entirely on a different route but what happens actually is lot different.
The same is the case on the Telecom sector. People are only talking about the 2g scams the ministers and bureaucrats getting into the jail but the actual scenario is lot different. It is the top telecom companies who are aiming at destroying as many competitors as possible and now they have achieved it. The govt ,media and courts are all controlled by these people only..
All we can do is just sit and watch..
Good work. I hope it reaches the right ears, and action should start.
What the heck ! Cant digest all this happening. It gives a sense of helplessness that these things are happening and we cant do anything about it . The planned destruction of Air India, Deccan – how obvious. You have connected the dots very well mate ! The flowchart summarizes everything, the privelege rich tycoons enjoy at the cost of blood and money of middle class citizens.
60Yrs back , it was British. Now, its our fellow citizens. The loot will never stop.
The idea of selling his UB mall and properties is jut as bad as the idea of selling king fisher airlines to get the money and pay back the debt. Almost all his properties in Bangalore does not have any real ownership with him and even the UB mall is I suppose a government property encroached by him. Most of the government parks in bangalore he has encroached by getting into agreements for maintenence of these parks. The rest of the property he holds were leased from private individuals and he is foricibly keep it in posession with dada giri
Ridiculous article! The facts has been distorted to suit the story. Kingfisher’s loans are mostly from Deccan, the “Man” of Indian aviation as per your article!
I think when you write some article use some facts and also some sense.! Speculating, gossiping and dreaming that it will be a scam is farfetched.
You like it or not, Kingfisher Airlines has been one of the best airlines in India’s history. It presented a brand to the world that every Indian can be proud of. True, KFA is going through tough times.. but the good times will be back and hopefully you will eat your words!
Taking lines from different articles from the web and claiming it as your own, is the cheapest thing one can do!
Vinay are you insane or a PR guy of Kingfisher??? If not, get your facts straight before commenting…!!
Interesting read; but highly judgmental. The views of the damned party has not been brought out. For instance, taking over of the routes from Air India, was foul, but it had resulted in providing a better service, on some of the routes. As a customer, I am not bothered, who provides me with service, as in the corporate world raids take place and those who break the law has themselves to account for. Air India itself in the first place do not deserve any pity from us as it eats our taxes and treats us like dirt.
And so is the case of the politician who, I agree, has become a common figure quoted for the ruining of the Air India.
But now you see who is starting to have the last laugh. The same Air India, has hiked fares by 20% in the last 2 weeks thanks to the cancellation of prime routes of Air India. May be Air India can be revived over the death of King Fischer! Tax payers like you and me, may be spared the pain of the knowledge of having bailed out another ailing public sector organization( we do not have much say, least even think of stopping such an act).
brilliant work by the author, well researched & well put…
Well written. Its been the case – Socialiase the losses and Capitalization of profits. If he used the same yardstick for IPL and removed Dravid/kUMBLE…. then he should GO! J am beginning to abhor capitalism now.
Hattts off to you. Great…simply great. Thanks to social media we find great thinkers like you
Good +++Analysis .All this facilitation to a playboy and pimp ! Con gress . The job is to con people Wait till you hear about Robert Vadra guys.
praful patel the country eater..hang him
Fantastic piece. Thank you and thank god for the internet. 29 years back a movie portrayed corruption in India and the exact same dynamics is still paralyzing our country. I sincerely wish that in the end we won’t have to look the other way and say “Jaane bhi do yaaron.” Keep writing.
A little correction / addition ::
Air Deccan was not sold out to Kingfisher. Captain Gopinath was cheated and forced to leave his company by the shrewd Malya…!! 😦
Read Simply Fly by Captain Gopinath for full facts…
Other than that, awesome piece of work… Keep it up yaar… I Salute you…!! 😀
Well written article – all points covered. Post more stuff….waiting to read! Good job, keep it up… 🙂
Excellent peice. Have shared on my FB status update.
An eye opener in true sense. Thanks !!
heyy its truly amazing 🙂 I want to know the motive behind doing all this. Why vijay mallya did all those stuffs. If u say monopoly is the reason then it has fail to achieve its objective as it is going to get crash. What has he gained through all this?
You should try your luck with IndiaTV. They need people like you who can make news and scams out of anything. I agree the way Kingfisher airlines are making losses is true but the way debt restructuring has been done is the way it is done in the entire world. And when you say, tax payers money from SBI has been taken by Vijay Mallya. That is utter bull crap. After nationalization of banks and RBI playing a major role in regulating banks, the savings done by common man in SBI and other banks is safe. There are enough regulations in place to make this happen.
This article sounds like 9/11 conspiracy theory and apollo mission conspiracy theory. Please watch this to see how stupid these conspiracy theories sound:
But, I would like to say it is a really well written article. You seem to have spent a considerable amount of time collecting all these facts and making a story out of it. Why don’t you try mystery novel writing. You might be a bigger name than Dan Brown.
I hope I am not offending you in any way. This is just my opinion. I might be wrong. (I have a history of being wrong for my opinions) 🙂
Interesting article, however a bit more research on the viability of the A340. Please note that due to this aircraft’s in efficiencies most airlines have dropped its use and Airbus has discontinued its production. Also the a 340 was pitted against the 777 and not the Dream liner. The 777 was delivered on time and it is the dream liner that is delayed. The Dreamliner is closer to the A 330 as a comparative sample. AI took some A 330 on lease but returned them as they were not as versitlie as the 777. So that decision in retrospect regardless what the intent was is actually a good one that the 777 were inducted. Personally beautiful aircraft and love flying it.
Kingfisher/Mallya shenanigans 😦
Really honored to have an eminent personality like you read, comment and share my blog.. it made my year 🙂
You, Sir/Madam, deserve an investigative journalism award.
I am not a journo..And there are so many who are better than me..but i will consider ur compliment to be my award 🙂
The Link to Air India’s balance sheet is a 404. The correct working link is http://www.airindia.in/SBCMS/downloads/AnnualReport_AICL_0607.pdf
A Clinical analysis …you think the Indian govt have the gumption to recover the dues? I seriously doubt it…Public sector banks throwing money at kingfisher really stumps commonsense.
How many any insurance companies didn’t buy any stake in KF airlines? BIg question???
One point missed … Share holders (Public) lost most of their money investing on this bad script!
One thing though – bank depositors do not lose their money unless the bank goes bankrupt because of bad loans made to KF. It is the shareholders in the banks that lose that money. SBI depositors will probably get back the same amount of money (deposit + interest) in spite of Mallya’s bad debts.
Point is – someone did lose in the write offs whilst Mallaya boogied the night away.
A well written article, and pardon me for saying this, but I still am perplexed how the author could come out with guns blazing, and in the process, convince the naive public that VM is a scam artist.
For a start, VM is a businessman, and from what I know, one of the least dis-honorable businessmen
You have written a lot of smokey news, sensational and totally meaningless
For a start, Singapore doesn’t restrict on the number of airlines. They only restrict the slots, and or Indian, it is carte blanche – i.e. anybody can fly there, as long as the Indian Civil Aviation Ministry okays it. Singapore cares the least, as they demand equal open air rights, and they are the first to open the skies, regardless they get the reciprocal or not.
For that, even before KingFisher started to Singapore, Sahara, Air Inda Express, and Jet and all were flying and happily, even AI and IC both too were flying. Don’t forget the 40 odd one-stop flights by UL to India, primarily feeding via their hub.
So your story that IA was cut to Kingfisher’s benefit is your load of tosh #1
Secondly, from what I know, for Air India, the purchase NEVER INCLUDED A 340s- they were keen on A330s, which they had taken on lease and were happy about it, but the next-gen, i.e. A350 is still in the drawing boards,and heck, the better choice was and is the 787, as of now. And the air india board will have to have their head scanned, as they already had great quads, 747, and the quad engines were going out of fashion, even then.
AI maybe seemingly, made up of a group of paper pushers, but they know what they are supposed to do, and until the Civil Aviation ministry starts to mess their plans, things were going awry, without any external help. Well, even the Civil Aviation ministry could only bully them to such extent before the great minds at AI will pull the breaks.
Old fleet, unionised crew and what more .. and the decision makers and planners in AI are doing their best and great work, as they don’t plan to break their own rice bowl. Hell, they are managing one of the most largest fleet with the least of trouble. Have you ever been in their ops room, in, say, far flung Malaysia ? Well, it is a well oiled machine, a well oiled machine that even VM couldn’t emulate.
And AI was not and never cannibalised for Kingfisher’s growth
If at all you can say who is benefitting from AI’s misery, it is their own little baby – AirIndia Express and the other carriers, Indigo, Spice and the lot .. i.e. LCCs
The days of the full service carriers are there, but not gonna sunset.
Thirdly, VM didn’t steal your money or my money.
Banks lend money, on leveraged businesses. Only in your wildest dreams will they keep on giving money, with no hope.
Well, I don’t know what is their leverage, but, heck, atleast one of the banks you have quoted work totally independent, so much so, said bank was the least exposed during Lehmans
And said bank, no, I don’t work for them, have a group of investor’s backing the loans to VM, so if VM defaults, it is the exposure to the investor group, and least for the bank
Now, if you know 2 cents about banking – banks make money by lending money, not keeping it locked up.
Well, they invest is low risk-low return ventures as well as a bit of high risk-high return ventures, and talking about Indian Banks, they are very risk averse, unlike the American Citi, RBS, HSBC, Lloyds and the load, who pay bankers more for the risky ventures. Should Kingfisher fold, the exposure to the other banks too, I bet is limited, and it is not like the banks are going to close shop
Why is Kingfisher struggling ? it is due to the price of fuel, and too much competition. And the notion that VM arm twisted into killing Sahara and Deccan, well, that is even the most excellent piece of conspiracy you could think of.
What next ? Are you going to say that VM is an American plant to destroy Indian Aviation ?
The market it an open market, and the world favors the brave.
Not those who sit and write up works of masterpiece, good for a movie script but nothing more than that.
There are bigger and real scams out there, and I would not dare to touch ’em, even with a barge pole, because the biggest crooks, i.e. crooks biggert than VM, are treated with the holier than though attitude by gullible people like you.
Well, it made a very interesting reading though.
It may be loads of Tosh but might have some truth in it
Hey there Michael Fernando. Who cares what you say about VJM ( its not VM that is his Dad ) being an honorable businessman or not? It looks like he is running a ponzi scheme. Every single asset of the UB group has been heavily leveraged. He is surviving on liquor sales cash flow and that is a bloody low margin business. No more excise evasion possible now as no seconds business left in Karnataka ! It is shameful that you defend VJM who has not paid salaries of KFA staff for months. Blaming the media, the govt etc is all horse shit. It is his way of blaming others while spending other people’s money. You said that there are bigger crooks than VJM so you just admitted he is one ROTFLMAO !! What are you drinking dude? RC? You are arguments are full of red herrings btw. Stick to the facts in the article and the current state of KFA thanks to brilliant management by VJM your hero. He is obviously someone who never keeps his word. No matter what spin you write here to defend him VJM has no credibility left whatsoever. So stop pandering to him.
Also, defaulting TDS was an honest oversight – the finance department was used to dealing in 1000s of crores and the small amount of 153 crores could have easliy been missed.
Dude.. Good amount of info there to bring in a different perspective to the whole KF mess. However few things mentioned in the blog like Aviation Ministry support to Mallya or AI ending up with orders for Boeing aircrafts, etc. are a little open ended. It is difficult to understand from the blog how these things happen(ed) and hence question the credibility of the blog.
Would be great if you can support all your statements with some quantifiable facts.
Why doesnt someone expose the scam behind the merger of the two national airlines AI and IC and trying to kill two at a time. What is the beedimaker’s and other government officials’ involvement in the scam, exactly at a time when the 2 airlines were taking off showing profits?
VM has already made many bankrupt wineries in to profit making companies. He doesn’t need any certificate from any one.
You made such a bid research for KF 7000 crore debt.
You will have spend rest of life researching and doing calculation about jet 14000 crore and air india’s 42000 crore debt. Also the only profit making airline indigo defies all the rules and logic of indian loss making aviation industry. You will have to research where indigo money is coming from, its seems like investors black money turning white. You will never know as it is private company who accounts you cannot scrutinize. Indigo’s case looks like satyam.
To be you seem to be a kicked out ex staff of KF taking out his frustration.
James are you drunk ? The only certificate Vijay Mallya has is his bought PHD from a dubious institute in california. Dr. it seems. Joker.
James it looks like you were Mallya’s janitor.
hirenpatel7928: yah, where is the proof .. 100% native style, create a whole lot of accusations and such, but not backing it up. Maybe there is some truth but not to the extent that VM has to be dealt a trial by media publicity and convicted in public
Ramya: That AI wanted this plane and that plane, but Civil Aviation minister shot it down – well, there are a lot of forums where there are a lot of armchair CEOs and armchair specialists. Who insist that AI will be better with this plane, or the merger was wrong. It is akin to those calling Michael O Leary a certified Jerk – jerk he maybe, but isn’t be making money ? (MOL is the boss of Ryanair .. do some google on him, and you will see that while the world hates him, he is their first choice when it comes to travelling cheap in Europe.
Doraiswami. S: Making profit ? so did KS say, but, running an operating profit doesn’t equate to profit per se.
So, if the theory that AI and IC’s merger dealt the death knell for the two, how come others were also scaling back operations ? Like BMI cutting down, Delta dropping their non-stop, and a whole heap of foreign airlines scaling back ? Doesn’t that only Indian aviation was in turmoil and that only Indian Airlines and AI merger messed it up – doesn’t the theory stink ? Well, even SIA laid off staff – they could because they are semi-private and are in the business of cut-throat competition and trimmed unprofitable routes, some thing that AI and IC could never do – as their primary mandate is to fly to destinations including those non-profit making ones, for the benefit of the travelling public
The truth is, airlines were undergoing consolidation, and, it did and does make sense.
Take Kuala Lumpur – Air India was flying obsolete A310s (200 odd passengers) , and Indian Airlines were flying A 320 or A 319 (130 to 150 pax), sometimes twice a day, sometimes the two airlines departing within an hour of each other. You don’t need to be an expert to see how many staff / crew and resource was wasted.
With the merger, AI runs an A330, filling in the morning slots, and then afternoon, based on loads, runs an A 320 or a 330
The merger gave AI / IC flexibility, immense flexibility, something the couldn’t do so before the merger – as AI was terrified of IC encroaching into the big-bird territory, and IC was also worried if AI will start inserting smaller planes
As for the conspiracy of the Beedimaker and all, no comments – all over the world, political lobbying is part of ‘democracy’
Take England – hope you know the furor when Eurofighter was rejected, with the British MPs demanding why India did that, in view of the millions of pounds being given as aid – the truth is, it was a form of lobbying which didn’t work, or the French did a better job somewhere
And US ? I read an article about Corruption in US – says that Asians are amateurs when it comes to bribery and corruptions.
In US, somebody had found out that a food addittive could be cancer causing and asked a senator to raise it. Do you know what the additive makers had said ? The industry, worth billions of dollars, could easily afford to pay off enough senators and congressman that the bill never even can go the vote, with repeated claims and counter claims and all for the next hundred years, so much powerful is the lobby groups.
Again, sensational reporting and analysis, with a lot of suggestions and nothing that holds water.
I am waiting for a part II, so I can possibly write up the script of a movie. Any takers ?
If Operating profit is not profit, then what is profit? And then what is an operating loss. Because, even when Air India was making a profit, why was Kingfisher making a big loss? Isn’t that proof that Mallya was mismanaging his airline?
Second, your theories on Air India, only vindicates my point.
1. Why was the merger taking place when both the parties were staunchly against it? In fact they were even making their opinions public. It was like an arranged marriage, where both the involved parties hated each other. So why do it?
2. Second why was the merger done in such a tearing hurry? Air India and Indian Airlines were not only two different airlines but had two deferent working philosophies. You just can’t integrate them overnight and then expect things to go smoothly. The pay and the training disparity is now coming out in the open. U really think people who were pushing for this merger did not all these ground realities? If you think so, then well, good luck to you.
3. And as you keep asking me for proof, will you back your Kuala Lumpur argument with proof?
And finally lobbying is fine, but when lobbying involves loss to the nation, then I am against it. And even in the US, if there is food additive that causes cancer and is proved. Do you even know what the reaction in the press will be? No amount of lobbying can save that company, that much I can assure you.
Read this case for example.. Link
I am not saying that US is corruption free, but I believe they draw a line when it comes to the nation and most US politicians don’t compromise on the nationalistic front. But Indian politicians and industrialist care two hoots about the country, which is my biggest grouse.
I humbly request is, please don’t approach this article with the mindset that it is wrong and sensational, which is what you seem to be doing.
KS: I am not berating you, but am a bit amused by the smoke with no fire ..
Well, you want proof ? just head to KL, ask the ground crew and see how many lost their job in their ralionalisation of the op. Almost all of them were from India, and were based in KL, in Expat terms, and having a whale of a time for just two flights a day.
Well, that was the key: those who insisted that the merger was a suicide operation were those who had vested interests in the merger not taking place. i.e. those fat old workers – uncles and aunties, who had their little empires, from KL, to Singapore to Bangkok to Colombo to Dhaka to everywhere .. Or well, ask those who travel to KL, about the two flights a day from IC and Two flights a day from AI, all running half empty, and the two flights had to be run, to make the connecting flights, but both being competitors, don’t dare even code share lest they become redundant (I hope you know what is meant by code share, by the way) And staff who spent more time busy on their daily news than preparing manifests, the next flight be buggered, and favors galore. Oh, well, the air crew – it was not about being cute and sexy, but, the majority of the AI/IC CC, somebody was betting that given an emergency evac, half of them would have run out of breath running down the aisle alone.
From my point of view, yes, it was a due merger. And I don’t work for AI or IC or IT (That is the airline code for Kingfisher)
Aren’t you blowing hot air with no proof other than implied robbery ?
Again, I am not here defending VM, or justifying robbery and corruption. My only take is that, unless you have been sitting in the airline trade, and know how the industry works, you are another sensational news reporter. Or somebody who writes, and no, I am not annoyed by you, but I am deeply awed by the time you take to collate info and put them together.
And that you are saying that the rest of the Western world’s businesses love the common man, it only makes me smile ..
Why does the American firms build Apple in China ? And what has Freeport-McMoRan done so far to uplift the lives of the people in Irian, while having minted billions and billions, out of which a fair share was funneled to American Lobby groups ? Oh, any awrds for guessing
Businessmen are Businessmen. This if free enterprise. There are casualties along the way.
If you had expected VM or NG or others to duly respect AI and IC and loose money, then the Indian airline industry should not have been liberalised. It is a necessery evil, and all you are seeing is growing pains. Which the rest of the world has seen and India is seeing.
And the beneficiary of the whole drama is the common man, who has affordable fares. And people like VM, and NG and all were the key drivers in the process. They do deserve due credit.
And for AI and IC making money ? yes, they did publish an operating profit for ONE YEAR, when the industry was upbeat. And regardless of the merger, the fact is, the whole industry hit turbulance, and you haven’t factored that in. Even if they were alone, with the sky high fuel price, and H1N1 and Sars like setbacks, the profit would have been erased. I am not a soothsayer, but having seen SIA do massive layoffs, as well as Malaysian Airlines do the same, plus Thai having to scrap a lot of lucrative routes, without the intervention of VM (that was in jest) what else could I infer ?
PS: thanks for the link on the 4.3 million US $ fine – well, even in US, who supports the Tobacco industry ? Ah, come on, don’t tell me tobacco is good for American’s health ? Yah, the minor culprits are caught and made news, when the major crooks are hidden in plain sight !
Dev Lall: “Major difference AI and IC were on our tab (that is those who pay taxes) and KF was on VM tab (someone who apparently does pay taxes). ”
Exactly – so how did VM rip our money ?
The Mr Flamboyant VM tried a new venture, and it is going down the drain, and for the common man, well, unless the banks, of all banks, Indian banks being extremely prudent in investing, are dragged down, and until the day it happens – NOT GUILTY, YOU HONOUR, and INNOCENT UNTIL PROVEN GUILTY
PS: I saw somebody berating VM for buying a player for his cricket team for a million bucks while his airline is bleeding – well, did the million buck come out of his pocket ? it is all OPM, and VM being in the limelight, of course, the others who do / did likewise are overlooked (OPM – other people’s money)
In India, with the 2G scam or any other scam, there is no outright robbery, but only an implied one. You can say, AI and IC mergers were nothing but bad business decisions, I can say they were done to deliberately to engineer their collapse. I worked all of this out, with info that was available in the public domain. If somebody, with proper access takes it up, I am sure he/she can crack the entire thing.
As for the public money, well 19 of the 23 banks that gave money to Kingfisher are public sector banks. And an 8000 crore hole in them, has to be filled up. And where will that money come, from the government. Which somewhere down the line, is our money. And also, the unnecessarily large aircraft order and the drastic cutting down of routes of Air India, forced it down the black hole of bankruptcy. And to bring it back up, public money has to be used again.
So, the notion that public is not losing money is fallacious to say the least.
Also, Don’t you think the team that turned around AI, would have ensured that the airline operates in the tougher times. Sure they might have not made a profit, but their losses would have definitely not been catastrophic. Also you have not explained why, in the so called good period for the airlines, was Mallya making losses?
Hey Michael you got one thing right that VJM plays with OPM. That is exactly the problem with him and his financial indiscipline. Btw your arguments defending VJM are just lame. Put a sock in it.
Well the Jury seems out and split voting. What is important is that why should every thing be made out about corruption and conspiracy. Can we not just look at it independently. Aviation ministry honcho thought he was business smart and savvy and ran AI and IC much like he thought it should be run instead of leaving it to professionals. He screwed up bad. VM also did the same and he screwed up, At best a case study for businessmen to a) Not let their ego get ahead of them b) Do not multi task and focus.
Major difference AI and IC were on our tab (that is those who pay taxes) and KF was on VM tab (someone who apparently does pay taxes).
So lets concentrate on keeping hocus pocus mumbo jumbo out and as long as companies are run by Fifes and not by pros this problem will not go away
@Michael Fernando: I am not sure I understand what you are saying. What is your point? My POV is that the author of this post has made a lot of generalizations in this post and thrown in lot of accusations on VM and many others in a very vague way. For example, saying that since AI & IA merged or that Deccan sold out to KF resulting in the present situation of the aviation industry or AI ending up ordering for Boeing even though originally it was something else – these are very vague statements which do not say how these happened or how they resulted in the current crisis or how they turn VM in a very very BAD person! It shows a very immature style of writing and plain ‘pointing fingers at others’ behavior.
KS: “I worked all of this out, with info that was available in the public domain. If somebody, with proper access takes it up, I am sure he/she can crack the entire thing.”
Let me put it simply: I have a few bits and pieces of privileged information, and again, it is NOT the complete picture, and I am able to say so, as I have contacts in the Airline Industry. Those are outside India and present a non-myopic or tinted view.
You should talk to people in the industry, who can clear the air. And the ‘public domain’ information has a lot of smokey stuff, stuff that a lot of people with 2 cents of idea will not even touch even with a barge pole. Not that it will matter anyway.
As for whether AI and IC would have survived tougher times, again, the jury is out there.
For example, take SIA, in 2003, they laid off 1000 cabin crew, and more than 100 pilots, a lot of them were bonded but were set free, as well as close to another 1,000 ground crew, for the airline to turn around. On top of the pilots union (yes, even in Singapore, they do have a union) agreed to a paycut of between 7% to 12%.
And in 2009, SIA asked staff to take unpaid leave and also voluntary pay cuts. Do you think such measures could have taken place in AI/IC ? never, says me – so no, they would not have been able to tide over.
And for your question why IT (Kingfisher) wasn’t making profit when AI was profitable, you don’t start an airline, heck, any business, and unlike the sensational media, you don’t quickly turn in profits, unless you have been a very and extremely prudent operator – i.e. with extremely slow growth.
It is a chicken and egg situation- if you are super slow, nobody wants to back your horse. If you are on steroids, more backers will back your horse, and then, you run the risk of breaking your leg too.
Thats’ business, from what little I learnt.
Oh, for the 2g / 3g scam, jovially, I would say that the jury is out there. After all, it was again westerners who consider ‘bribery’ as ‘cost of doing business’ !!! That’s besides all Western companies swearing that bribery is illegal as per their law and all .. Let’s leave it at that !
Oh, your insisting that 8000 crores are down the drain, well, you are already pandering the notion that the banks are going to be bailed out by the govt, and your tax money will do that.
If the banks run out of money, thanks to VM’s venture, that is their funeral. If the govt
Ramya: well, my questions are also in line with what you are asking. And KS’s prompt reply asking me to furnish proof to challenge his POV, is classical Legal fishing expedition ! You prove me wrong or I am right !! ha ha.
And to KS and others – No offense. I hope my words didn’t offend anybody.
I am just airing my views.
Michael screw your privileged information man. Many of us know exactly how VJM operates. He bloody blows up more money than he earns and he has been doing it for years ! It is just caught up with him as KFA started bleeding big time. And what hell you keep diverting the topic here that is KFA by talking about all the other airlines, losses and scams. Those are irrelevant.
KS: Re: your write up on the missing history of Inida – I only have one word “BRILLIANT”
Michael nice try to sound neutral. Do you think we are all idiots here and cannot see you spinning bullshit in defence of Mallya? Pathetic.
H Rao (@thehemantrao): you just proved that you are one of those who’s emotions run amock and cloud your judgement
I am not defending VM, or do I work for him, or any of his dozens and dozens of businesses
heck, neither do I have anybody working for him or do I benefit if he keeps going.
KS is doing a great job, in writing other stuff, but, from his writing, my standpoint is the same – he has zero idea of the airline industry and spun a nice piece of yarn.
Me ? neutral ? you can’t take an objective criticism I guess .. do I get paid or pat in the back for trying to sound neutral.
I aired my thoughts, but I realised that the overall idea is to beat the donkey with useless info so that the other side of the coin never exists ..
Have fun – I am not here to rain on your parade or pee on your patio, if that makes you happy …
if at all you are happy, I was told that a few lessors called in their debt, and maybe you guys will get your wish after all – kingfisher may wind down, and in the process, a thousand odd people who made their living will be looking for jobs – not to count the numberous whom Kingfisher gave a leg-up in their career, though treating them as cheap labour .. !!!
That’s what matters for me – not what VM did steal or not ..
Michael if that is what matters to you, the first thing you need to do is to call for VJM to removed from the management of the airline and the accounts scrutinized. The only way forward for KFA is if he goes. What matters to me is that VJM blows up OPM and blames everyone else. You said you have privileged information. Do you know how much money he blows on himself from his public companies that is not his???
I have been a victim of IA’s cancellation of Baroda Mumbai flights, as a result of which, the prices range anywhere from 9000 to 11000 (for a distance of 350 kms!). A clear case of conspiracy. PP has managed to do what then telecom minister then did to MTNL to favour another telecom major. There are a large number of such cases. Have u heard of Mafco, a once-thriving Maharashtra state undertaking deliberately reduced to ashes by ministers and bureaucrats to promote competing private companies. or Meltron or HMT or Hindustan Photofilms…. the number goes on and on. You have done brilliant home work…..congrats.
I am not a fan of Mallya or his airline but what he has done is pretty much what goes on in politics and capitalist economies. He consolidated his power ( if that is legal or illegal is a separate issue) and then he made sure it becomes hostile for his competitors and easy for him. Now having done that he should have made sure he is profitable which he did not ( I am not sure why/how he did it).
Now speaking of bank bailouts, his debt is not a taxpayers money handed to him directly – that means government did not hand him the cash , banks did. Now why would banks do that? If I lend you 1000 rupees for some small business (assume we live in 1900s where 1000 is a lot of money) expecting you to give me that back from your profits and you fall on face with that money. I cannot write it off since it is a large chunk of change. Now if I get a assurance or am told the business still has “leverage” and you’ll give me back the owed money and new money you are asking from me at a higher rate why not save your losses by lending more? This is a vicious circle unless painful and austere measures are taken such as cutting on costs of in air food (make it more like Air Deccan), negotiate the correct fees with vendors, pay cuts with some assurances for retention etc .
What I am trying to say is, Vijay Mallya may have done lot of wrong things and driven his aircraft fleet into ground by making astronomical losses, but he still does not owe anything directly to public. He might have used unlawful/illegal methods to drive his competitors to make losses which I believe is not main subject of this article.
TABD so what you are saying he is the lesser of two evils argument. The point of this article is to show the Ponzi scheme that Mallya runs. He is like greece, big talk but keep defaulting.
I agree on your statement ” He is like greece, big talk but keep defaulting”. I do believe in public new agencies to certain extent after cross verifying the sources and here is what the I read (http://www.bbc.co.uk/news/business-13798000) ”
Why is Greece in trouble?
Greece has been living beyond its means since even before it joined the euro. After it adopted the euro, public spending soared and public sector wages practically doubled.
However, while money has flowed out of the government’s coffers, its income has been hit by widespread tax evasion.
When the global financial downturn hit, Greece was ill-prepared to cope.
It was given 110bn euros of bailout loans in May 2010 to help it get through the crisis – and then in July 2011 it was earmarked to receive another 109bn euros.
But that still was not considered enough.
And so, in October 2011, the eurozone asked banks to agree to a 50% “haircut” on their Greek holdings, alongside an enhanced 130bn-euro bailout.
Since then, the economic situation in Greece has deteriorated further and the new deal involves an even bigger debt write-off than previously consented to by the banks.
He is doing some of it blatantly but he is not AIG or Chase Bank where in he took in large sums of tax payers money and then pay huge bonuses to its employees. I personally know an air hostess who works for Kingfisher airlines and she makes just enough money to pay bills and save a little as savings. As mentioned in the QA from BBC site, there are numerous factors for a country to go bankrupt than a company.
Company is a sociopath institution that takes care of self interest and is accountable to share holders only. When it comes to a country – there are foreign relations that soar if something goes wrong this could have long lasting effects (Obama Netanyahu relation is an example), there are domestic policies which to a great extent are determined by governing body. Now its human nature to be greedy and that is exactly what was done by people in Greece, – tax evasion and at the same time the country joined a union which it was still not at par with in its policies. This made a dangerous concoction and took it to the brink of bankruptcy.
I do not say this is a lesser of an evil. Capital injection is more like smoking pot, you do not know when the burning end reached your lips and you want more. What I do say is, Mallya has not yet taken tax payers money. And the banks who have lent him have done it knowing the risks they take. If you think that a bank should not have done it, then call your bank and make others aware that bank is doing wrong decision. I moved to US when the housing crisis started and know exactly the pain and grief it causes. This company is no where near it.
TABD Mallya is guy who spends more than he earns. His company financials are all fudged to make it look good. His liquor business is a low margin game. He runs public companies and has taken money from people in the form of pubic offerings. He operates a ponzi scheme and a lot many more people are going to get hurt financially because of this guy. Capital injection can only happen if Mallya is removed from the management of the airline. The guy flies around in large private jets on KFA expense for starters !!! Maybe the govt needs to step in like they did for Satyam. As for the air hostess you know, ask her if she is getting her salary on time.
It’s not Mallya alone who fudges his accounts. Every worthless industrialist, middle class businessman, the whole Gujrati, Sindhi, Jain, agarwal, marwadi community etc fudge their accounts to save taxes and spend a lavish life cheating the government.
Its a different fact that the government itself eats people’s money, but compared to the taxes being withheld from the government by businessmen and alike, the public money the government swallows would be a pittance!
How do you say capital injection happens if Mallya goes out of KFA ? You do not need to naitonalize a company for it. As long as he does numbers reporting in legal framework there is no argument about it. If you think he is just pulling the number of out thin air, where is the substantiation for that ?
The air hostess does get salary in time.
what is funny is, that, the haters, will hate ..
what matters and is forgotten is, Kingfisher will loose it’s lustre, if not for VM .. VM is the de-facto face of KF, a-la Richard Branson – Virgin, and Tony F – Air Asia.
No Richard, no Virgin, no Tony F, no Air Asia, they become ‘just another airline’
Anyway, the good news is, reports are out that Jet Airways is going up in volume carried, so, KF’s loss is Jet’s gain .. major gain, as Jet is full service carrier, like Jet 🙂 🙂
So when will Naresh come clear the ?? haha
This is really some article. We need more of such informative articles. Facts logically and systematically presented without the mumbo jumbo which confuses ordinary readers like us. I have already hit share on my FB. looking forward to more such articles
wow…kaipullai “vadivel”, what an article. It seems that you have put to good use the available free time due to non casting of you in any kollywood films. I think tamil fans were uninformed about your present vocation.
Everyone’s dream is to have good times like Mallaya and your article is a eye opener for the way in which to achieve.
Nicely researched, data backed article. thanks.
Poor citizens of India including me.
Vijay Mallya + Beeding King = PRAFUL PATEL ????
Very very informative and very well written.
Thanks a lot for sharing.
These story should have been about the crook bankers. They should be put in jail and not mallya. If a common person goes for the loan the banks inquire even about their grandparents, how did bank gve such high amount loan to a company already making huge losses without any assets as gurantee. Whoever has written this nonsense, is definitely from some bank. The bankers always get away, these time they should be jailed for fooling around with people’s money.
Absolutely mind boggling … Indeed 60 yrs of independence has strengthen the nexus between corrupt politicians and guys like ****** Mallya. I think we shoudl file a PIL to bring him to justics along with his cronies in the corridors of power in Delhi
OK, so we know that Kingfisher Airlines / Mallya and allies have hood winked all to get benefits for themselves – So?. What are we gonna do about it?. Mere words will not help, action is required.
Can we start a written petition to Prime Minister to get the tax payers money back from Mallya’s other ventures!!. I am for it – are you?.
Only rich people have the power to enjoy tax payers money and loot the country? Why cannot public banks do due diligence with business men or well connected and networked men the way they do when we apply for a housing loan? laws are always different for the rich? Our Country will become a Banana republic!!!!!!
Ultimate post. It is in very detailed and well described. It make things very clear and covers every aspects that should be considered. Well written. congrats.
Peanuts. Compared to Wall St. Three Trillion bailout – that’s something !!!
Not really! Rs. 9000 crores is approximately US$ 1.8 billion. Considering that the US budget and economy are fifteen times the size of India’s, an expenditure of Rs. 9000 crores to the Indian exchequer is equal to an expenditure of US$ 27 Billion to the US government. Considering that the Indian government spent this on a single company, while the US government spent that on the entire economy, what has happened with Kingfisher is still significant. So now, if we consider that the Indian aviation industry (at less than US$ 10 billion) is 1% of the Indian economy (US$ 1 trillion), while wall street is 10% of the US economy, we need to multiply the Kingfisher figure yet again by ten, which gives a whopping US$ 270 billion, twice India’s annual tax revenues. Not exactly peanuts.
Wonderful chronology… 🙂
Keep up the good work… 🙂
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You have managed to tell a good story … sum of all Airlines debacles = Mallya’s fault, although you must have spent a lot of time on the reserch I think your perception of the situation is shaded / one sided.
Superb writing my friend. Continue your good work.
I am sure this article in today’s Hindu has not evaded your attention!!
Mallya flies high despite Kingfisher – P. Sainath
The article has some factual errors though overall well-written. It states at one place that 32 flights between India and Singapore were equally divided between Air India and Indian Airlines, which is not true.Jet Airways ( another Indian carrier) was and still is one of the major players on this route.So how come merger of AI and IA gave straight benefit to Kingfisher.Sounds like some facts have been fabricated to build up the case. I am against any bailout to KF though as it is really public money.
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one of the stupidest article i have read..blames everything from air deccan debacle to air sahara sale to air india merger on mallya.. air deccan, well, went its own way,, bcoz the promoters.. lakhani and all.. wanted to sell out.. air sahara is still jetlite… air india merger and buying 110 jets… ask ncp how much kicbacks they got.. well for 7000 cr debt for mallya it looks to be taken in drunken stupor.. no doubt mallya is one the scheming chaps.but he seems to have horribly mismanaged this thing.. otherwise.. it wouldnt have come to his personal stakes in UB and USL.The article looks to be a bit an oveerboard conspiracy theory.. notwithstnding the over 100 fools who are going gaga over it
Incisive piece… Been happening all the time and we seem to have no power to stop it. I suggest u do a piece on how Reliance has virtually been getting all favours from Govts(irrespective of the party) since decades. U will stumble on a tank of worms! 🙂
The article is exhaustive & well-researched. A well-planned & intricate scam, managed by a world class bluffer fiddling with poor-men’s hard earned money. Can he be punished appropriately?
I never read a masterpiece like this before!! Tooo well written extreme sarcasm am sure must have numerous drafts if not you are GoD
I would be interesting to bring other carriers like Indigo and Jet into perspective.
Interesting article of Vijay Mallya.
Amazing article! Btw.. wasn’t the article updated on 4th February 2012 ? It says 4th February 2011. Just couldn’t resist noticing that.
Became a big fan of your blog. Started with the that shows ‘The Butterfly Effect’ on Indian history and thoroughly enjoyed reading it and now this.
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Absolutely superb rendering. But……….as promised in the article, u haven’t named the ‘powerful’ govt official.
Hi Kaipullai, I accidentally landed in Four little things that shaped India. It was fantastic, I wish this article be taken as a documentary by Nat Geo or feature in What-if books.
Well, regarding this article it is well know fact that Mallaya siphoned public money with his so called power house friends made things interesting to read.
I feel, we like to only watch Sankar’s movies – Gentleman, Indian, Shivaji, One day CM but in fact nothing seems to change. In every government department there is corruption and no fear that the wrong doer will eventually get punished. Pls. do share your thoughts on how we can stop this cancer.
I got few more topics to chew in your blog, look forward for another good article.
Happened to read this from a link in Facebook today. I have also been following the developments (is it right to say so ?!) in the Indian aviation industry for long and could very well understand. Your humourous style narration is excellent. I am going to share this on my FB page.
ONE DAY I WILL OVER COME UUUUUUUUUUUUUU!
Hi,So will kingfisher will ever fly.Will vijay malaya finds investor?
This article is simply awesome! Very good.
Mate, You write better than any professional writer. Why do you not have a syndicated Column?
Wait….Don’t tell me…….. I know. It’s because you speak the truth and don’t bore us and are logical. The last one is actually unforgivable in mainstream journalism. How dare you actually make sense.
Fast forward three years. There is no Kingfisher anymore. The company and the airline have gone under, Subroto Roy is in jail with allegations reaching upto terrorism funding being leveled against him. Nothing is being heard about Mallya, except reassuring news like South Western Railway putting their foot down and acquiring his pretentious Kunigal stud farm to build the last link to the Nelamangala – Hassan railway line. Oh, and SBI and other banks are finally moving in to acquire Mallya’s property to realize his debts. The so called “flamboyant” party man didn’t want to pay salaries to his employees, ran from pillar to pole to his high friends but no one wanted to touch him as his antics with public money had suddenly became common knowledge and outrage thundered across the nation. Heh. I guess I do believe in Karma now.
I just stated reading your blog. I feel bad for being so late to discover this collection of gems! Great work buddy!!
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I don’t agree ont he news papers . News papers and televisions are their to fool the people. It is a mass hypnotism. We have to bring down bigger plan of the politicians which runs in the background. He is just the puppet. So we have to give him a chance , and try to recover the money slowly and find out the main culprits, who are the western people who made him caught in the scam.
Their are other people also , If you think he is curropt then the whole system is currupt. we want to get our money so make him work and get the money mean time you put your whole intelligence and catch those guys leaving him peacefully.
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The weakness of any system is it’s control by corrupt people. Money & Women are key to success in Honey Trap. Mr Vijay Mallya is one of the product of Banking System & Judicial system to cheat the country. Forget about bringing black money of yester years. Think about bringing present public saved bank money. Dailogues & Roarings can never fetch any. Why do a lot of hue&cry made against bankers? Next, Judicial people are no different in bailing him out with I.P act. Mr Vijaya Mallya knew the weakness of the people who govern both systems, and he has full control on it’s proceedings. Now, try to analyse the SWOT analysis of Mr Vijaya Mallya. Strengths – Lawyers of all kinds in front end, corrupt politicians, bankers & Judges at back end. Weakness – Wine &Women. No stringent Law or Rule can be applied, as rich corrput people knew what to offer to get amnesty. All Lawyer force is fighting for his cause unitedly. Our Govt agencies like CBI,ED, CID has dismal success against such white collar criminals, because many of those officials might have got favors long ago, includes AG, Adv Generals.
You are mentioning the beedi in the middle? You are not liking beedis?
Assume a beedi and cirget both of length 70 mm.
Beedi has 1 gm tobacco. Cirget has 15 gm.
When I smoke off a beedi in latrine I smoke only haf. Other haf is tossed.
Cirget is smoked fully until the filter tip.
Therefore as per mine’s and other learned people’s calclation I smoke wonly 0.5 gm tobacco.
Now your chance.
Other things and all in article may be okay. Air hostess photo veery nice.
Bhai Bidi reference is to link Praful Patel the Bidi King
Classifying a loan as bad debt is NOT a forgiveness of the debtor. The Jargon has changed. But this is the process that was supposed to be followed since decades. Loans used to be first transferred to “recalled debts”, and thereafter to “protested bills” when legal procedure for recovery is commenced.
Are the rules of a free market economy applicable to a largely command economy disguised as one? I have wondered about this, knowing about the accumulation of India’s politically nurtured NPAs, and the strangle hold of the Neta-Babudom and their cronies on every aspect of the economy. When I was doing “Protested Bills” and “Recalled Debts” as a Probationary Officer of the State Bank of India,way back in the ’70s, on honorary over time, because nobody else wanted to do it and Probationers had to do what they were asked, I was admonished for finding roughly 60 to 70 % in Agriculture and 40 to 50% in Small Industries and Business to be Non Performing Assets in three different branches and asked to water the rules down while applying them(!) Ultimately, the price will be paid by innocents as happens in any country where the rapacity of its rulers and their capacity for dissembling exceed the resources of the nation. But till then? The laws of economics are as much a political, purchasable, majoritarian convenience as any other man made law
As for Mr. Vijay Mallya, do losses owing to business fortuity count as a willful default? Not all of us have purchased the sleight of tongue that made Vijay Mallya the bad guy, and gave worse guys the slip.
While Kingfisher is a typical legerdemain of Indian Crony capitalism, one must not forget the Ice Berg that sank the Titanic. Kingfisher was addressing a specific market segment. The Business Traveller who was sick of the insouciance of India’s public sector carrier and different from the other private Indian operators who were addressing the low cost market. Kingfisher was doing quite well until it hit the turbulence created by Sonia Gandhi’s Sharad Pawar’s Praful Patel (Yes, the same member of Manmohan’s “Coalition Dharma” aka “parivar-that-loots-together-to-stay-together who bought Honest Antony’s wife’s paintings for Air India).
Patel bought an enormous number of Boeing aircraft that nobody wanted and Air India’s plans and estimates did not warrant for Air India that drowned the Indian Air Passenger market with excess capacity sinking Kingfisher. Air India would have drowned too. But, because it is a Public Sector, it has been kept flying at the cost of India’s growing deficit, inflation and other tax payments. Praful Patel then went on to sell Air India’s newly acquired Aircraft at far below cost to Etihaad Airlines. He also sold several of Air India’s prized and high potential routes and landing rights. The people of India have and are paying far more for the Air India black hole that Sonia’s Pawar’s Patel made than The King Fisher debt which is merely a part of the whole.
Pawar’s Patel also bought Sonia Maino’s “Honest” Antony’s wife paintings for enormous sums for an ailing and Air India that flying exclusively on Indian Tax Paying and Inflation beggared, non flying midlle class
Who arm twisted the Banks to finance Kingfisher on the collateral of a “Brand” (A first anywhere in the World). Chidambaram or Pranab Mukherjee?
It would be good when superficial Journalists, Bankers, Central Bankers and Politicians refer to Vijay Mallya’s Kingfisher, they also refer to the Senior and bigger of the Siamese Twins that has drained the Public coffers. Praful Patel’s Air India. (I wonder whether Pawar’s Baramati and Mallya had a spat over booze leading to the enormous bill presented to Indian Citizens by Praful Patel ?)
Nor is Government, for that matter, fit to run any commercial enterprise that services a customer. For example, does Government service the citizen? Of course not! All Government does is exploit and extort from the citizen for the benefit of VIPs. Government is not fit to run Government.
also related news on http://www.factsgrabber.org/business-2/air-india-gets-govt-backed-rs-6000-crore-loan/
Sir hats off to you for writing this. While i knew it, this is much more structured way to put it. And there are more stories how Air india was destroyed to bring in Arab / gulf airlines who surely must have been paid hefty amounts to Bidi Kings.
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