Millennium Post

Vijay Mallya’s moment of truth

Finally, there is some good news for the beleaguered businessman Vijay Mallya. After months of speculation, global spirits major Diageo announced decision to buy stake in Mallya-owned United Breweries Holdings and United Spirits. If the new share-holding pattern goes through, Diageo will become the majority stakeholder in Mallya’s firm and, in return, give him and his group about Rs 11,000 crore in liquid money, something that he so desperately seeks in this time of crisis.

What can Mallya do with this cash? The corporate sector and the government need to advise him on how to sustain businesses as social properties, not just as private ventures. Ever since his love for flamboyance and mismanagement of resources landed his airline business into a loss-making venture, he has sought help from the government in cash or kind. The successive civil aviation ministers have been lenient with him, even when he has put the public and his employees at extreme unease by arbitrarily cancelling flights in the case of the former and not paying the salaries in the latter case.

In a regular circumstance, Mallya and his group should be free to choose what they want to do with the money they raise by selling stake in their company. However, Mallya needs to be more responsible – socially and for the sake of corporate governance. He needs to see all his companies – be they profit making or needing cash to keep themselves afloat – as a group, a family that needs to draw upon each other’s strength to successful business ventures.  

The year 2012 has seen a lot of interrupted flights across the country because of Kingfisher Airlines when its pilots went on a record 58-day-long strike. The situation became so bad for the employees that the wife of one of them committed suicide because she had no money to run her house, as the management could not or chose not to pay them their wages. Now, that he cannot say that his group does not have money to spare, he must now make sure that the airline flies its aircraft smoothly and all employees are given their due wages on time. It is noteworthy that the amount his group will get from the foreign stakeholder is much more than the total debt on Kingfisher Airlines.

He should set up an accountability mechanism for his businesses so that a similar situation does not arise again where Kingfisher Airlines can neither fly smoothly nor can it pay its employees on time. The country cannot afford to face such a crisis again.
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