From flamboyance to crisis: The metamorphosis of Vijay Mallya

Some months ago, Firstpost had explained why Vijay Mallya won't shut down his troubled aviation play, Kingfisher Airlines. After all, over several years, Mallya has positioned himself and his business empire as a brand in itself - flamboyant, expansive and representative of growth and adventure, an Indianised version of Virgin's Richard Branson, if you will. Mallya would, therefore, be willing to give it everything to ensure the airline company which is so close to his heart does not crashland despite the terrible times it is going through.

To be fair, the banks have been rather understanding with Mallya, with State Bank of India earlier mentioning that the industrialist should make every effort to keep the airline flying. With a massive debt burden of close to Rs 7,500 crore, Kingfisher Airlines will require all the help and support it can garner from bankers. But with the Reserve Bank of India (RBI) too keeping a close watch and time running out, options for Mallya are severely limited.

In this context, Mallya's latest move of opening talks with Diageo to sell a stake in flagship United Spirits is indicative of how the 'King of Good Times' is trying to negotiate the oil slick he finds himself in at this point. Reports say a number of options are being discussed with Diageo, and The Economic Times even says there is a likelihood of Mallya ceding control of USL to Diageo as part of this deal. While Mallya has been able to craft intricate, phased deals earlier with foreign giants in his businesses, this time a whole lot more is at stake for him.

How Vijay Mallya - he of the calendar girls and lavish parties and cricket team fame - negotiates this phase of his crisis will determine how astute an industrialist he is.

Both USL and Kingfisher Airlines have huge debt levels, and while there's no clarity yet on where the funds raised from the Diageo deal will go, the deal itself has now become critical for the Mallya empire as a whole. The ET report also envisages the possibility of Diageo eventually holding a 25 percent stake in USL, with Mallya remaining chairman with 15 percent. Some have ruled out a total sellout by Mallya, saying he would surely retain a stake in USL. In typical Mallya fashion, he is reported to have said at an annual general meeting that there's no reason he needs to give anyone for a stake sale.

For those following Mallya closely, the discussion of the possibility of ceding control of USL, a jewel in Mallya's UB empire, itself indicates the extent of the crisis which the group is currently going through. As of now, both sides have stuck to the expected positioning that it's only talks which are on and there's no certainty that they will lead to a transaction. But bankers, regulators and shareholders will be keenly awaiting the developments on this front since if there's anything Mallya is short of other than cash at this point, it is time. He needs to close a deal quickly in order to pump much needed funds into his businesses, particularly his airline which is only barely afloat.

The recent opening up of foreign direct investment (FDI) in aviation may have provided him a much-needed lifeline to attract a foreign partner in his airline, but even there, it would take a brave overseas partner to come into Kingfisher just now, given the extent of its problems and the huge debt burden.

How Vijay Mallya - he of the calendar girls and lavish parties and cricket team fame - negotiates this phase of his crisis will determine how astute an industrialist he is. The Diageo deal, if it happens, may well hold the key to whether India's corporate history will remember Mallya as just a flamboyant businessman who failed to read the signals right and failed, or as a gritty industrialist who negotiated through the most difficult period his empire ever faced, even giving up control in some businesses, and eventually bounced back.

The time for Vijay Mallya's metamorphosis is now.