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Vijay Mallya to get Rs10,800 cr from USL stake sale

Bangalore,Nov 6 () : Vijay Mallya would be getting around Rs 10,800 cr by the weekend when Diageo Pt picks up 51% stake in United Spirits Ltd (USL).

Vijay Mallya will continue as Chairman of the group while MD and other key posts will be decided by Diageo. Vijay Mallya holds 27% stake in USL and public holding amounts to 29%. After the buying of stakes, it has to be whether Mallya will pump in money into Kingfisher Airlines or reduce the debt of USL.

Going by his previous statements he indicated he would not sell his family silver to bail out the airlines. The airlines’ license expires on December 31 and so far, no revival plan has been submitted to DGCA. Salaries are being paid in parts.

Diageo has in the past two years made many acquisitions in the spirits industry,prominent being the Chinese liquor company, Sichuan Swellfun Co. Ltd for Rs 5440 cr. USL’s controls 50% of the Indian liquor trade and this could prove to be an asset to Diageo.

The consumption of liquor is to touch $230.3 billion in two years. Analysts say that most of the money would go towards closing the USL debt of Rs.8,443.57 crores. If this is done, then profits will increase and a 50% profit can be got since most of the revenue goes towards interest on debts. Yet another Vijay Mallya company, United Holdings ltd (UHL) has a debt of Rs.3,478.81 crore.

Vijay Mallya inherited the family business and later made it big by acquisition of Shaw Wallace and McDowell’s and converted the Kingfisher brand into a popular one. His liquor trade spread to abroad too. Trouble began when he bought Air Deccan at a time when the aviation and in general the economy was facing a slowdown. He entered publishing with Cine Blitz and Asian Age (which later Deccan Chronicle bought). He now owns the F1 formula car racing team which has Sahara as partner.