The Prevention of Money Laundering Act (PMLA) court in Mumbai, a special purpose court dealing with money laundering offences has allowed a consortium of 15 banks led by the State Bank of India to dispose off the economic assets of absconding liquor and beer baron Vijay Mallya. The assets include financial securities and shares in his companies, including shares in the United Breweries Holdings (UB Group) which have been under attachment since 2016 when Mallya flew to England to escape creditors and Indian tax authorities.
The sale will give Heineken the chance to acquire the majority in India’s beer market leader United Breweries known through its flagship beer brand Kingfisher. As of December 2018, Heineken held an equity stake of 43.7% in United Breweries while Mallya and group companies held a stake of 14%. In March 2019, the Dutch brewer increased its stake by another 2.8 percent as reported by VCCircle on March 27 (inside.beer, 31.3.2019).
The lenders are seeking to recover more than Rs 6,200 crore (USD 868.62 million) from Mallya along with interest of 11.5% per annum payable since 2013. The fugitive, who is known as the King of Good Times for his party lifestyle, suffers from the collapse of his Kingfisher Airlines in 2013 which was heavily indebted with bank loans of about Rs 7,200 crore (USD 1.1bn). Already in 2012 Mallya was forced to give up control in United Spirits, the third-largest manufacturer of spirits products in the world, which he sold to market leader Diageo in a USD 2 billion deal. As most of the transaction proceeds were received in overseas accounts the money was not used to repay the debts (inside.beer, 12.1.2017). In the meantime, most of Mallya’s other posessions in India have been confiscated and sold including his huge beachfront Kingfisher Villa in Goa, India (inside.beer, 19.4.2017).
Despite being wanted by the Indian authorities, Mallya still serves as chairman of UB Group, a role he holds since 1983 following his father's death. Under a special shareholder agreement between Heineken and the former majority owner of the brewery, Mallya is allowed to be chairman for life and a non-retiring director.
Mallya became internationally better known through its co-ownership in Formula One team Force India, which he acquired in 2007 for EUR 90 million together with Dutch businessman Michiel Mol and which went into administration in July 2018 (inside.beer, 30.7.2018).
The ruling of the special purpose court has been stayed till January 18, until which all parties affected by the order could appeal to the Bombay High Court.
