Vijay Mallya. Photo: AFP
Vijay Mallya. Photo: AFP

In support of Vijay Mallya by Vijay Mallya

Five takeaways from the open letter Vijay Mallya wrote on Sunday

Mumbai: Vijay Mallya on Sunday wrote an open letter saying that the State Bank of India (SBI) knew about the rise and fall of Kingfisher Airlines Ltd. In the statement, Mallya said he is making all efforts to reach a one-time settlement with banks while payments from Diageo Plc agreed last month are to himself, towards his personal, non-compete obligations.

“Personally, I am not a borrower or a judgement defaulter," Mallya said.

The open letter comes at a time when the SBI, after three years of waiting, moved the Karnataka high court seeking Mallya’s arrest, seizure of his passport and a full disclosure of his assets and liabilities.

Five takeaways from Mallya’s statement:

1) SBI knows it all

In November, the SBI declared Mallya a “wilful defaulter" for failing to repay loans advanced to his Kingfisher Airlines Ltd, which was grounded in 2012, weighed down by Rs.7,000 crore of debt. SBI has Rs.1,600 crore of exposure to Kingfisher.

But Mallya, in his open letter, pointed out that Kingfisher Airlines was launched on the basis of a viable business plan vetted by SBI Capital Markets and renowned international aviation consultants, but despite every effort, it was an unfortunate commercial failure caused by macroeconomic factors and then government policies. SBI Capital Markets is the investment banking arm of SBI.

Mallya also says nothing was out of the blue. “The truth about Kingfisher Airlines and its financial stress due to external factors has been reported by SBI to the Reserve Bank of India (RBI) in their letter dated 31st January 2012," Mallya pointed out.

2) Am not the only defaulter

Mallya said that a successful disinformation campaign has ensured the liquor tycoon becoming the poster boy of all bank NPAs (non-performing assets). “In fact, banks have NPAs of 11 trillion and have borrowers who owe much more than the amount allegedly owed by Kingfisher Airlines to the banks—a fact never alluded to or widely reported by the media as in my case," Mallya said. “None of these large borrowers (whose debt is significantly more than Kingfisher Airlines debt) have been declared wilful defaulters, but unfortunately, United Breweries Holdings and I have been declared wilful defaulters by certain banks on technical grounds. I have legally challenged these declarations," Mallya said. Last month, the Supreme Court (SC) asked the RBI to furnish details of companies that have each defaulted on loans amounting to more than 500 crore in sealed covers within six weeks. He did not refer to the non-payment of salaries to his airline employees.

3) I am not an absconder

“I have been most pained as being painted as an absconder—I have neither the intention nor any reason to abscond. I have been a non-resident for almost 28 years and RBI has acknowledged this in writing," Mallya said. He also referred to his last month statement on personal future after quitting Diageo/United Spirits—that he wants to spend more time in England closer to his children. He said that statement has been grossly distorted and mis-portrayed. “I wish to reduce my business commitments gradually and devote more time to my family, and that my resignation from United Spirits was a step in this direction," he said.

He said he has been summoned before various investigative agencies and has duly attended and cooperated with each of them, adding “ I will continue to do so".

4) Don’t ask for Diageo money

On 25 February, Mallya, chairman of United Breweries Holdings, said he had struck a deal with Diageo, which would pay him $75 million over five years and drop all charges of financial impropriety against him in return for stepping down as chairman of United Spirits. SBI has moved to courts claiming a share on that money.

“The payments from Diageo Plc to myself are towards my personal non-compete obligations globally, except in the UK. In effect, I have given up my interests in the spirits business globally at considerable cost," Mallya said.

Last week, Mallya’s legal counsel argued that Diageo was paying Mallya $75 million because of a five-year non-compete clause he had accepted.

5) Media is unfair to me

As always, Mallya said Indian media was unfair to him. “I have always lived an honourable life and the calumny notwithstanding shall continue to do so. As to the allegations in the media, all I can say is I hope some sobriety and sense will prevail and truth not held a hostage to TRP (television rating point)," Mallya said. He said the past few days had witnessed a near hysterical campaign in the media directed against him. Mallya had made such remarks about media in the past.

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