I don’t need Diageo deal, claims Whyte & Mackay owner Vijay Mallya

By SCOTT REID AND ALAN BALDWIN
Published on 29/10/2012 00:00

INDIAN tycoon Vijay Mallya has insisted that he does not have to do a deal with drinks giant Diageo or sell off the “family silver” to prop up his troubled airline.

Mallya’s United Spirits empire, owner of distiller Whyte & Mackay, has been locked in talks with Diageo to sell a key stake in the business to the maker of Bell’s and Johnnie Walker.

However, in an interview published yesterday, India’s answer to Sir Richard Branson poured scorn on reports that he was being forced to sell stakes in profitable businesses to fund his Kingfisher airline venture.

“I am not so sure that I lack commercial acumen to the extent that I would sell a hugely thriving, successful business to take the cash and put it into an airline in an environment such as India,” said Mallya, in his office at Force India, the Formula One team he co-owns.

“My group is sufficiently cash-generative to fund the airline as we have done. We have put almost £150 million since April 2012 into the airline. But that has not meant that I have had to sell my family silver to fund the airline,” he added.

Diageo is thought to be pushing for a deal that would give it a strategic interest in United Spirits, which is India’s second-largest drinks group, with a valuation of some £1.5 billion. The London-listed group is looking to grab a bigger share of the fast-growing Indian market.

However, Mallya insisted: “I do not have to do a deal with Diageo at all. I am under no compulsion whatsoever. But having said that, I will do what is good … for myself, my family wealth and for long-term shareholder value.

“I must do that for every business because these are public companies and I owe it to the shareholders and stakeholders in these companies.”

He added: “Selling assets to fund the airline? No plans of that nature whatsoever.”

Kingfisher Airlines, which has never made a profit, recently had its licence suspended by India’s civil aviation authorities and has not flown since the start of October after a protest by employees, who had been unpaid since March.

The cash-strapped carrier said on Friday it would use its own money to try and get back in the air. The day before, staff had agreed to return to work after the airline said it would pay three months of overdue salary by 13 November.

According to the consultancy Centre for Asia Pacific Aviation, Kingfisher has total debt of about $2.5bn (£1.6bn).

Mallya said the airline had to be dealt with professionally, but he wanted it to survive.

“The environment and government policy must also encourage me to do that,” he said. “We are going to give it our best shot. We are committed to that.”

The tycoon, who said on Twitter last week that he was relieved to no longer be a billionaire on the latest Forbes list because it might lessen some of the envy directed at him, defended the management of the company.

He said there were many reasons for Kingfisher’s predicament, but laid much of the blame on taxation and the Indian government.

Mallya has been looking for partners and said two investment bankers had been hired as part of the search.