Tycoon Mallya Told to List Wealth as India Creditors Spurn Offer

  • Lenders reject his plan to pay part of $1.4 billion he owes
  • Debts stem from the collapse of Kingfisher Airlines in 2013

Indian business tycoon and owner of Kingfisher Airlines Vijay Mallya.

Photographer: S Kumar/ Mint/Hindustan Times via Getty Images

India’s Supreme Court gave Vijay Mallya two weeks to declare all his assets after lenders rejected the tycoon’s settlement offer over the $1.4 billion owing from the collapse of Kingfisher Airlines Ltd.

The court on Thursday gave the ex-billionaire until April 21 to comply after banks turned down Mallya’s proposal to repay as much as $900 million. The lenders asked the judges to order Mallya to pay back the entire amount due, with interest.

The besieged beer baron last week offered to settle his dues with a 40 billion-rupee ($600 million) payment by the end of September. He also promised a further 20 billion rupees if United Breweries Holdings Ltd., the parent of Kingfisher, wins a lawsuit alleging defective engines from International Aero Engines AG contributed to the carrier’s collapse. Mallya has sparred with local media for portraying him as the symbol of soured loans in India.

Judges on Thursday also asked Mallya to make an immediate partial payment to banks to show his good intentions. The next hearing in the case will be on April 26. Finance Minister Arun Jaitley told lawmakers in parliament last month that Mallya owed 90.9 billion rupees, including all interest compounded, as of Nov. 30.

Sumanto Bhattacharya, a spokesman for Mallya and his UB Group, declined to comment immediately on the Supreme Court order.

Losses

After five straight years of losses and mounting debt, Kingfisher was grounded in October 2012 as workers protested unpaid wages and lenders unsuccessfully attempted to revive the carrier, which ran up high costs in a bid to redefine luxury travel in India.

Punjab National Bank, India’s second-largest state-run lender, named United Breweries Holdings a “wilful defaulter,” United Breweries Holdings told the stock exchange on Feb. 16. United Breweries Holdings is considering challenging the declaration in court, according to the statement.

Usha Ananthasubramanian, chief executive officer of Punjab National Bank, didn’t respond to calls to her mobile phone seeking comment.

Engines

Sara Banda, a spokeswoman for International Aero Engines, said the East Hartford, Connecticut-based maker has delivered 6,900 of the engines to almost 200 customers around the world, and the aircraft part has been in service for 27 years. “IAE does not comment on pending litigation,” she added. 

A consortium of 17 lenders, led by government-controlled State Bank of India, approached the nation’s top court last month to help recover 70 billion rupees from Mallya, who has maintained Kingfisher Airlines was an “unfortunate commercial failure” caused by macro-economic factors and government policies.

Kingfisher Airlines owed 69.63 billion rupees to banks as of Jan. 31, 2014. The loans were guaranteed by United Breweries Holdings and Mallya personally. The amount doesn’t include interest accumulated after that day, and expenses and costs.

Mallya’s lawyer C.S. Vaidyanathan had submitted the settlement proposal to the Supreme Court on March 30.

England

Mallya, 60, who presided over a beer and liquor empire a few years ago, was ranked the 45th-richest Indian with a net worth of $1 billion by Forbes in March 2012. He said in February this year that he’d decided to spend more time in England to be closer to his children. The Attorney General informed the Supreme Court last month that he had left the country after the lenders’ consortium sought to prevent his departure.

Gross bad debt in India’s banking system stood at 5.1 percent as of Sept. 30, more than three times the bad-debt ratio at Chinese lenders, data compiled by the Reserve Bank of India show. About 14 percent of their total lending has soured, and that includes restructured and written-off debt.

The government has left Mallya no option but to pay up as taxpayers will have to bear the burden otherwise, according to New Delhi-based R. K. Gupta, managing director of Taurus Asset Management Co.

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