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Business News/ Companies / People/  Vijay Mallya says seeking a one-time settlement with banks

Liquor baron Vijay Mallya on Sunday 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 in a statement.

On Friday, after waiting for three years, India’s largest lender State Bank of India (SBI) moved the Karnataka high court seeking Mallya’s arrest, seizure of his passport and a full disclosure of his assets and liabilities.

The plea by SBI came two days after it moved the Debt Recovery Tribunal (DRT) in Bengaluru seeking the same directives against Mallya, a Rajya Sabha member, who once styled himself as the “king of good times".

The bank also staked a claim at DRT for the $75 million Mallya is set to receive from Diageo Plc in return for his resignation as chairman of United Spirits Ltd, which is controlled by the London-based company. The resignation and the deal were announced on 25 February.

However, Mallya’s legal team has filed objections against the SBI’s applications filed at DRT.

“Legal proceedings apart, I have been making efforts to reach a one-time settlement with the banks, and to that end I have had three meetings and follow up calls in the recent past and my efforts will continue—this settlement would be based on additional payments to the banks," Mallya said on Sunday.

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

DRT is expected to pass orders on SBI’s application seeking lenders’ first right on the $75 million payout from Diageo on Monday.

The tribunal had reserved its order after hearing submissions made by both parties—bankers and Mallya—on Friday.

In November 2015, 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 7,000 crore of debt.

SBI has 1,600 crore of exposure to Kingfisher.

Diageo completed the purchase of a majority stake (54.7%) in United Spirits in July 2014 and had been pushing for Mallya’s departure from the company.

Last week, the Delhi high court had refused to hear a plea by Mallya against SBI decision to name him “wilful defaulter".

On 25 February, Mallya, chairman of United Breweries Holdings Ltd, or UBHL, 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.

“Having recently turned 60, I have decided to spend more time in England, closer to my children," he said.

On Sunday, Mallya said the past few days have witnessed “a near hysterical campaign in the media" directed against him.

“Recognizing that the media was indulging in sensationalism, I thought it was best to let the drama play out—never spoil a sensational story with the truth. However, I feel the time has come to clarify my position in order to avoid this relentless attack on my reputation," Mallya said.

Commenting on his airlines business, Mallya said Kingfisher Airlines Ltd was launched on the basis of a viable business plan vetted by SBI Capital Markets (a unit of SBI) and renowned global aviation consultants, but despite every effort, it was “an unfortunate commercial failure caused by macroeconomic factors and then government policies".

“The truth about Kingfisher Airlines and its financial stress" due to external factors has been reported by SBI to the Reserve Bank of India in its letter dated 31 January 2012, Mallya added.

A consortium of banks loaned funds to Kingfisher Airlines, a public company, but these loans were secured by blue chip securities, Mallya said.

“After the closure of the airline, since April, 2013, the banks and their assignees have recovered, in cash, an aggregate of 1,244 crore from sale of pledged shares. In addition, an aggregate of 600 crore is lying deposited in the Karnataka high court (since July 2013) and a further sum of 650 crore belonging to United Breweries Holdings has been deposited in Karnataka high court since early 2014, being sums realized from the sale proceeds received by United Breweries Holdings from the sale of shares in United Spirits to Diageo Plc in July 2013," Mallya said.

Thus, the aggregate cash recovery/security available is 2,494 crore, he said.

Mallya said despite pledging blue chip securities and depositing significant amounts in court, “a successful disinformation campaign has ensured my becoming the poster boy of all bank NPAs (non performing assets)".

In fact, he said, 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 that he said, was “never alluded to or widely reported by the media as in my case".

He pointed out that none of these large borrowers, whose debt, he said, is significantly more than his airline’s debt, have been declared wilful defaulters, but that United Breweries Holdings and he had been declared so by certain banks on technical grounds.

“I have legally challenged these declarations," Mallya said.

He argued that all the enquiries conducted have failed to find any evidence of misappropriation of funds by Kingfisher Airlines or himself—“for the simple reason that the allegations and the innuendo to this effect are plainly false".

“My group directly invested over 4,000 crore into Kingfisher Airlines itself which investment stands fully impaired—it is not as though it is only the bank debt that has suffered. The banks will recover a substantial part of their debt—my group’s loss is permanent. Absent any fraud, the concept of corporate limited liability cannot be ignored," Mallya said.

Mallya, who has been downgraded to a former billionaire by Forbes, now doesn’t really have a business group to call his own.

“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 the Reserve Bank of India has acknowledged this in writing. Over the years, I have built successful businesses in India and abroad. I am also honoured to be a member of the Rajya Sabha. I have been summoned before various investigative agencies and have duly attended and cooperated with each of them, and I will continue to do so," Mallya said in his long statement issued late at night.

He also drew attention to his earlier statement on moving to the UK.

“My statement as to my personal future after quitting Diageo/USL—that I want to spend more time in England closer to my children—has been grossly distorted and misportrayed. 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.

“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 added.

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Updated: 06 Mar 2016, 10:56 PM IST
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