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Our Guide to the Vijay Mallya Case

by | Sep 8, 2021 | Company Director Search, Company Monitoring, DataGardener, Uncategorized | 0 comments

Despite experiencing almost unparalleled economic growth over the past few decades (rivalled only by the growth of China and Japan), the Indian government seems to be experiencing the consequences of such a rapid influx of wealth in such a short amount of time. Recently, many billionaires and multi-millionaires residing in India have been forced to flee the country due to investigations undertaken by the Enforcement Directorate, a department in the Indian Ministry of Finance responsible for investigating fraud allegations. These include celebrity jewellery designer Nirav Modi as well as his uncle Mehul Choksi. However, the largest and most recent of these has involved the extravagant billionaire Vijay Mallya.

Who is Vijay Mallya?

Vijay Mallya is a former Indian billionaire who made his money inheriting his father’s businesses, United Brewery Holdings (UBHL) and United Spirits. He became the chairman of UBHL at the young age of 28, making him, at the time, one of the youngest and most exciting businessmen in India.

In fact, Mallya quickly cemented this position by growing his father’s company by 64% between 1998 and 1999 and acquiring more and more companies. At one point, he even owned an IPL team called Royal Challenger Bangalore which he bought for around $111.6 million, as well as his own Formula 1 team, Sahara Force India. However, this all disappeared as quickly as it had arrived after Mallya decided to break into the air travel market against the advice of his financial advisers. In 2005, Kingfisher Airlines began commercial operations a mere three years before the global financial crash.

What happened to Kingfisher Airlines?

Despite the warnings of his financial advisors, Kingfisher Airlines quickly took hold of a large share of India’s air travel market. In fact, up until December 2011, Kingfisher Airlines accounted for the second largest share of the domestic flight market. To expand his operations, Mallya also bought Air Deccan in hopes of increasing revenue and being able to fly internationally, though this didn’t go quite as planned. It turns out that Kingfisher airlines never actually turned over a profit in its entire time as the second largest air service in India. These huge losses, many of them brought by the financial crash of the time and some by poor leadership and business plan, meant Mallya had to take out loans from banks to keep the company going.

How was Vijay Mallya able to take out such large loans on a failing company?

Kingfisher Airlines was running at a huge loss every single year since its inception, so how on earth did its founder convince so many banks to lend him millions to keep it going? Vijay Mallya was actually a member of the Rajya Sabha, the upper house of the Indian Parliament functionally equivalent to the House of Lords in the UK. Many suspect that his political ties meant that banks were finding it awkward to turn down his large and frequent requests for loans.

How much did Vijay Mallya take out in loans?

In total, Vijay Mallya took out the following loans:

16 billion Indian Rupees (INR) from the State Bank of India (SBI) – ~$218 million

8 billion INR from Pujab National Bank (PNB) – ~$110 million

8 billion INR from IDBI Bank – ~$110 million

6.5 billion INR from the Bank of India – ~$89 million

5.5 billion INR from the Bank of Baroda -~$75 million

4.3 billion INR from the United Bank of India -~$59 million

4.1 billion INR from the Central Bank of India -~$56 million

3.2 billion INR from UCO Bank -~$44 million

3.1 billion INR from Corporation Bank -~$42 million

1.5 billion INR from State Bank of Mysore -~$20 million

1.4 billion INR from the Indian Overseas Bank -~$19 million

900 million INR from the Federal Bank -~$12 million

600 million INR from Punjab and Sind Bank -~$8 million

500 million INR from Axis Bank -~$7 million

In addition to other smaller loans, in total Vijay Mallya took out around 90 billion INR from banks, equivalent to around $1.2 bn.

How did these loans turn out to be a scam?

Despite the SBI declaring him bankrupt, Mallya continued to take out loans from various banks to continue running his businesses due to his political affiliations. Finally, in 2012 Kingfisher Airlines ceased operation. His company did not submit PF or income tax from employees to the Indian government, refused to pay staff wages and Mallya was forced to step down from his position as chairman of United Spirits and flee creditors from India to London and initially refused to pay back the loans, which he has now partly done.

Mallya is now facing charges of cheating, criminal conspiracy, money laundering and diversion of loan funds in India. He is currently being extradited from the UK to India and will face trial despite most of his assets having already been liquidated by the ED.

Lessons learned from these events

Stories and scandals such as Mallya’s billion-dollar fraud make it clear that now more than ever, lenders and creditors have to be incredibly careful as to who they lend to. Knowing your customer and monitoring their business is vital to keep your own assets safe from fraud and dangerous lending. With services like DataGardener, due diligence on borrowers has never been easier. With an extensive database on any and every UK based company, DataGardener helps businesses conduct an efficient risk assessment and fraud prevention to make sure you’re never lending money to anyone who can’t pay it back.


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