Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  Shaw Wallace and football: Mallya’s Kolkata chromosome
BackBack

Shaw Wallace and football: Mallya’s Kolkata chromosome

As Diageo checks into the UB Group, Kolkata clubs—East Bengal and Mohun Bagan— keep fingers crossed

The deal with the football clubs restored Vijay Mallya’s (pictured) tattered links with Kolkata, where he went to school and college. Photo: Hemant Mishra/Mint (Hemant Mishra/Mint)Premium
The deal with the football clubs restored Vijay Mallya’s (pictured) tattered links with Kolkata, where he went to school and college. Photo: Hemant Mishra/Mint
(Hemant Mishra/Mint)

Kolkata: Vijay Mallya’s tryst with Wallace House began in 1984, when he teamed up with Manohar Rajaram Chhabria (Manu), then a Dubai-based dealer in electronic goods, to take over the erstwhile Shaw Wallace and Co. Ltd to retain his pole position in the liquor business.

Driven into it by Mallya, Chhabria acquired RG Shaw and Co.—Shaw Wallace’s holding company—in an overseas deal, but taking advantage of India’s restrictive foreign exchange regulations at that time, he managed to keep Mallya, chairman of UB Group, out of Wallace House till the last day of his life.

Thwarted from taking a slice of Shaw Wallace—India’s oldest liquor company headquartered in Kolkata—by ally-turned-arch rival Chhabria, Mallya cemented ties with this city in 1996 when his companies bought 50% stake apiece in the football teams of East Bengal and Mohun Bagan clubs.

That was nine years before he finally stormed into Wallace House—the central Kolkata edifice that used to be Shaw Wallace’s headquarters until it was merged with the UB Group—by acquiring from the Chhabria family in 2005 a 54% stake in the liquor firm.

It took him a little over 20 years to seize this company—the 1,300 crore deal catapulted the UB Group to the second place among spirit makers worldwide, although it remained a distant second to Diageo Plc—the maker of Johnnie Walker whisky and Smirnoff vodka.

Chhabria died in April 2002 after having waged a war not only with Mallya, but also with the Indian government over alleged violations of foreign exchange laws.

But once he took control of Shaw Wallace, Mallya’s ambitions started taking flight in different directions. “Airlines and spirits—both make you fly," he had famously said addressing his first press conference at Wallace House in 2005. But the airline eventually took the wind out of Mallya’s sail, while Johnnie Walker kept walking.

As Mallya cedes a controlling stake in the UB Group to Diageo, millions of fans of Mohun Bagan Athletic Club are on edge. Will the 123-year old club continue to receive funding from United Spirits Ltd (USL)—its principal sponsor and 50% stakeholder in its football team?

Now that the UB group has found a strong investor, USL should step up its financial support to Mohun Bagan, said Anjan Kumar Mitra, the club’s general secretary, who faced criticism and even legal challenge from a section of supporters for what was seen in the late 1990s as a sellout of the football team.

Mallya brings luck to the team, say Mohun Bagan’s supporters—each time he is at the ground rooting for the team, the club wins against its arch rival East Bengal.

The deal with the football clubs restored Mallya’s tattered links with Kolkata, where he went to school and college. “Ami Kolkatar chhele," (“I am a Kolkata boy") Mallya would typically say in his accented Bengali, introducing himself to people in Kolkata.

The partial sale of Mohun Bagan’s football team, which was renamed McDowell Mohun Bagan after one of the UB Group’s key whisky and rum brands, was a commercial arrangement to raise resources, recalls Mitra. From 3 crore in 1997, the UB Group has scaled up its support to 12 crore for the current year.

Irrespective of the deal, USL remains committed to Mohun Bagan and “will contribute for its growth", says Alokesh Banerjee, the firm’s vice-president (marketing) and one of its nominees on the board of the Mohun Bagan’s football team—United Mohun Bagan Football Team Pvt. Ltd.

The UB Group didn’t scale back funding to the Kingfisher East Bengal club even after it sold a 37.4% stake in United Breweries Ltd (the stake is now held by Heineken NV), according to Debabrata Sarkar, a director and executive committee member of the East Bengal club. The beer maker remains the club’s principal sponsor.

Mallya pays for Kolkata’s football teams out of his passion for the sport, says Sarkar whose club has received the same amount as Mohun Bagan every year starting in 1997.

As Diageo checks into the UB Group, the two Kolkata clubs remain hopeful that the liquor maker won’t tighten the purse strings till Mallya remains at its helm, even if he is no longer the majority stakeholder.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 09 Nov 2012, 03:57 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie