When you owe your banks R8,000 crore, your employees six months’ salary arrears and oil retailers a bunch of money, you’ve got to be flying low. In the three months to June 2012, Vijay Mallya’s Kingfisher Airlines paid out more by way of interest — R384 crore — than the R301 crore it earned. It’s not surprising then the flamboyant liquor baron is seeking the Lord’s blessings. For that, he’s managed to put together R80 lakh to offer gold-plated doors to the Kukke Subramanya temple in Dakshin Kannada district of Karnataka. Mallya is known to have his spiritual moments; a new plane, for instance, is always flown over the Balaji temple in Tirupati.
Under the circumstances, he has done the best he can. The near-bankrupt Kingfisher, which has never posted a profit since it started operations, has not paid salaries since February this year. In a steep fall, Kingfisher’s passenger load factor, dropped to 53% in July with strikes by employees forcing the airline to call off flights; as a result, its market share fell to 3.4%.
Mallya’s best business is housed in United Breweries which makes Kingfisher beer. While United Spirits commands over 50% market share in the branded spirits market, the firm has a consolidated net debt of just over R8,000 crore. The R9,168 crore company has seen its leverage increase to 1.7 times, while the interest coverage ratio has narrowed to 1.3x for 2011-12. A sale of treasury stock or of United Breweries shares could infuse the much-needed capital and a strategic stake sale could happen sooner rather than later.