In 1915, several small beer companies in India were making beer for British soldiers. At the same time, a man named Thomas entered the scene. He unified all the small beer-making companies to form a single company called the United Breweries Group. While all this was happening, a talented businessman named Vittal Mallya, who had studied at the Doon School, understood that this company would surely grow. He had already invested money in this domain and even reviewed its balance sheet. Let’s explore the complete journey from scratch to understand the “Vijay Mallya Scam”.
At regular intervals, Vittal Mallya began buying shares in United Breweries, consistently purchasing them at times when few others were interested. Over many years, he became the company’s major shareholder. For the next 32 years, the company continued to grow. In 1947, as the British were leaving India, control of the company was handed over to Vittal Mallya, who was then just 22. He was smart, intelligent, well-educated, and, most importantly, held a majority of the company’s shares. Initially, he was elected as a director of UB Group, and the following year, he became its chairman. Under Vittal Mallya’s leadership, UB Group surpassed other companies in India and rapidly advanced. Within four years, in 1951, UB Group acquired McDowell. It also acquired other companies, but McDowell was the most notable acquisition. Amidst these developments, Vittal Mallya married Lalitha Ramiah, and on December 18, 1955 they had a son, Vijay Mallya.
Vijay Mallya Introduction
Later, Vittal Mallya married twice, but he had only one son, Vijay Mallya. Vijay was born into a wealthy household and didn’t live like ordinary children. While middle-class children in India played outdoor games, Vijay Mallya drove battery-operated cars, a rarity in India at the time. When he attended St. Xavier’s College, he drove a Standard Herald car, from which he purposely removed the silencer so it would make a lot of noise, drawing everyone’s attention as he arrived.
As Vijay grew, so did his father Vittal Mallya’s business. Vittal implemented innovative strategies, including a pivotal move in 1959 to expand the company’s reach. Noticing the demand for foreign liquor brands, he invited these brands to produce their alcohol in India rather than importing it, enabling local production and distribution. This led to the establishment of IMFL—Indian Manufactured Foreign Liquor. You can still see “IMFL” on bottles developed this way today. A few years later, Vijay Mallya graduated from college, and Vittal began involving him gradually in the business, having already decided that Vijay would one day take over and lead the entire enterprise.
Plan to Establish Corporate Hierarchy
Firstly, Vijay Mallya established a corporate structure, creating positions such as VP and AVP. After this, top management would report to M. Srinivas and Vijay Mallya, and then they both would report to Vittal Mallya. In this way, he maintained hierarchy, and the entire process became smooth.
In 1977, a pivotal event occurred for the UB Group. A new government took power in India and imposed a nationwide alcohol ban. The UB Group, whose main earnings were from the alcohol industry, faced a serious threat. Many liquor companies started collapsing, with their owners selling assets in panic. However, Vittal and Vijay Mallya took a different approach. Vittal believed the government couldn’t sustain such a ban for long and saw an opportunity. While others sold off at low prices, the Mallyas bought these assets, betting on a turnaround.
As Vittal predicted, the government eventually lifted the ban, allowing alcohol sales again. With most competitors weakened or collapsed, the UB Group gained a significant edge in the market. Following this, they diversified into areas like food and pharmaceuticals, though alcohol remained their most profitable sector. Despite this success, Vittal and Vijay Mallya wanted to shift the company’s image away from just the liquor industry, so they continued investing in various domains and industries.
Vijay Mallya’s Plan to relaunch Kingfisher
A year later, with computers not yet in use, Vijay Mallya was sorting through the company’s old documents. He came across records showing that the UB Group had acquired a company called Castle Breweries, whose logo featured a Kingfisher bird—though a bit different from the logo we see today. Castle Breweries had been shut down by the UB Group, but Vijay liked the logo and saw potential in it. He decided to modify and relaunch it.
Vijay Mallya’s motivation was to compete with the Mohan Meakin Golden brand, which was outpacing the UB Group at the time. Initially, Vittal Mallya opposed the idea, but after much persuasion, Vijay convinced him. In 1978, Kingfisher was reintroduced, although it wasn’t immediately launched across India. Due to the numerous compliance requirements in the liquor industry, the brand was only available in select states, limiting its profit potential.
Even after establishing the brand, it took several years for Vittal and Vijay Mallya to gradually increase UB Group’s presence in the liquor industry. In 1983, when Vijay Mallya was around 28 years old, he traveled to New York on company business. The next day, on October 13, 1983, Cathay Pacific Airlines hosted a cocktail party in Mumbai, which Vittal Mallya attended. Tragically, during this event, Vittal suffered a heart attack and passed away at around 58 years of age. As soon as Vijay Mallya received the news, he returned to India.
Vijay Mallya – New Chairman of UB Group
After Vittal Mallya, many in the top management of the UB Group felt that Vijay himself would become the chairman. However, Mallya’s family held the majority of shares, among which Vijay Mallya had two-thirds of the shares of the UB Group, which he had taken through Mallya Private Limited. So, there was a lot of commotion, and many strategies were applied, but even after Vijay Mallya became the chairman of the UB Group, challenges persisted.
Now, after becoming the chairman, the problem was that since his father wasn’t there, the four regional heads of the UB Group and the top management wanted to be the chairman themselves. Vijay Mallya doubted that if he took advice from these people, they wouldn’t provide him with the right guidance. In a way, Vijay Mallya was alone. At this time, his friends from Saint Xavier’s College—like Deepak, Anand, Naresh Malhotra, Yogesh Desai, and Alok Chandra—came together to help move the UB Group forward. All of them were top management professionals and very skilled. Vijay Mallya trusted them the most.
Now, at this particular time, when Vijay Mallya took charge of the UB Group, the turnover was 350 crores, with a valuation of around 40 crores. The volume of sales was 3.8 million cases.
