From King of good times to King of bad times

Flight of fancy exposes Mallya to hostile takeovers

From a flamboyant businessman Vijay Mallya is now as vulnerable as a child in a candy store. For a man who owns racing horses, he has placed his bet on the wrong horse when it comes to business.

Betting on a money guzzler glamourous business like airlines has drained Mallya and his group of vital resources. Trying to protect Kingfisher has drained Mallya of his resources. Even after selling various assets he could not protect his airline. Lenders have now filed for recovery under the Sarfaesi (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act which gives them the right to possess the assets that are mortgaged with the banks and sell it to recover their dues.

Ironically this comes at a time when there is a hostile takeover bid on his fertilizer company Mangalore Chemicals and Fertilizers by Pune based Deepak Fertilizers.The hostile bid has been planned at such a time when Mallya can do nothing but wait and watch. Any attempt by Mallya to increase his stake in the fertilizer company would signal to the world that he has the money staked in places where others have not searched. It would lead the bankers and ex-employees of Kingfisher to his door asking for their rightful share.

Deepak Fertilizer has acquired 24.46% of Mangalore Chemicals, while Mallya has only 22%. Deepak is marginally short of touching the magical 25% mark, which would trigger the takeover code giving it the right to ask for 20% share from other shareholders. Deepak Fertilizers is in talks with another shareholder who holds nearly 10% stake in Mangalore Chemicals.

Mangalore Chemicals was a sitting duck waiting to be bought. The company has a market capitalisation of just Rs 650 crore and a revenue of over Rs 3,700 crore. It generates profit before tax of nearly Rs 102 crore. More importantly, Mangalore Chemicals is expected to just enter its most exciting phase when it receives natural gas at its port based plant.

Mallya is in an unenviable position where he has no moves to play to protect his interest.His is the classic case of a man killing the goose, not being satisfied with the golden eggs it gave daily. Alas he has none, but his horses.