The Kingfisher story in terms of numbers and accounts.

1. 1
Report by:
Divya Tibrewal
Roll No: 57
MMS (First Year)
Year: 2015-17
DSIMS
Analysis of Financial
Statements

2. 2
Index
Sr.No Particulars Page
No.
1 Global Scenario 3
2 Characteristics of Aviation Industry 4
3 History and the Current Scenario of
the Indian Aviation Sector
5-8
4 Major Players in Domestic Market 9-10
5 Kingfisher Airlines-Company Facts 11
6 Timeline of Kingfisher Airlines 12-25
7 Market Price Analysis 26
8 Related News Articles 27-28
9 Financial Analysis 29-31
10 Reasons for Failure of Kingfisher 32-34
11 References 35

3. 3
Global Scenario of Aviation Industry
The Airlines is one among the inventions that had changed the way how people
live and experience the world. In due course of time it has now become
impossible to imagine business and leisure travel without air travel. The airline
industry exists in intensely competitive market. In recent years, there has been an
industry shakedown, which is expected to the trend towards expanding domestic
and international services.
The airline industry is classified into four categories: International, National,
Regional and Cargo. Airlines industry facilitates economic growth, world trade,
international investment and tourism and so plays a key role in globalization
making it a large and growing industry.
Air travel (both business and leisure) has grown by around 7% in the last decade.
Business travel has grown as companies having global presence in terms of their
investments, their supply and production chains and also their customers.
Availability of aircrafts at affordableprices backed by increased tourism had led to
rise in leisure travel. Overall in terms of regions in developed regions like Europe
and North America a slower growth is seen when compared to developing regions
like Asia Pacific.
The key challenge is to ensuremeeting of customer requirements and at the same
time make effective cost cutting measures and continuously being efficient and
competitive and profit making. The Asia-Pacific region and Middle East are the
emerging markets in airline industry. They are expected to experience a higher
traffic growth and expand rapidly. The global airline industry being high
competitive has resulted in huge cumulative losses. Many airlines have either
gone bankrupt or have collapsed. For example, Sabena, Swissair, Alitalia, Delta,
United.

4. 4
Characteristics of Airline Industry
Capital Intensive: It's a capital-intensive business which requires huge amounts of
money to operate effectively. This industry requires capital for expensive
equipments like aircrafts, maintenance systems, control towers, simulators etc.
Labour Intensive: Airlines need personals like pilots, crew members, security
guards, cleaners, engineers etc. It's a very labour-intensive industry and nearly
1/3rd of the revenue is used for the payment of workforce.
Thin Profit Margin: The profit margin is very thin in this industry. It averages to
about 1-2% only.
Seasonal: Earlier airlines used to see a heavy load during summers (because of
vacations) and a relatively lesser load during winters. The seasonal factors results
in rise and fall of airline revenues over the course of the year. Over the years the
seasonal effect has reduced to a greater extent.

5. 5
History and the Current Scenario of the Indian
Aviation Sector
1932: Mr. J.R.D. Tata flies a De Havilland Puss Moth from Karachi to Mumbai as
part of the first Tata Sons Ltd. Flight to deliver mail carried by British Imperial
Airways
1948: Govt. of India acquires 49% stake in Tata Airlines, designated it a flag carrier
and renamed it as Air India International
1953: Jawaharlal Nehru, in friendly transaction, convinces the Tata group to let
the Government of India acquire a majority stake in Air India International and
nationalizes air transport
1953: Indian Airlines formed by merging eight former independent domestic
airlines
1960: India enters the jet age with an Air India B707. USA and India are connected
for the first time with an Indian Airline
1990: East West Airlines becomes the first private airline since 1953
After 1991
1991: Private airlines were allowed to provide the service under 'air taxi scheme'
to operate chartered and non-scheduled services.
1994: Private airlines permitted to operate as scheduled air service providers.
2003: Air Deccan lowered down the fares to 17% of previously charged rates thus
introducing the concept of budget airlines in India.

6. 6
Consolidation
The under-pricing of tickets due to the intense competition and the increasing
number of budget carriers resulted in losses to the budget carriers as well as to
the entire aviation sector. Consolidation was looked as the single way out which
would lead to less competition and stable fares.
The main reason for the increasing costs and reduced efficiency and flexibility for
the Indian aviation sector was poor Airport infrastructure and manpower
shortages. In 2007, there were 13 scheduled carriers which was estimated that
this number would fall to 8-10 by 2010 in this fragmented Indian domestic
aviation sector and the estimation is almost true considering the current scenario
of the aviation sector.
2007: Jet Airways announced that it would buy Air Sahara for US$500 million
2007: Air India and Indian Airlines merged into one entity named NACIL
2008: Kingfisher-Deccan deal was the third alliance in the Indian aviation sector.

7. 7
Current Scenario of Aviation Industry
The Indian Aviation Industry, being one of the world’s fastest growing aviation
industries, has a compound annual growth rate of 18%. There are 454 airports
and airstrips in India, of which 16 are international airports. As of May 2006,
private airlines accounted for more than 75% of the sector of the domestic
aviation market.
The Indian aviation sector saw an increase in revenue by nearly US$ 21.4 million
in December 2009 due to increase in traffic movements. Moreover, the Airport
Authority of India may gain better margins in the near future as predicted by
Ministry of Civil Aviation. These have been attributed primarily to the boost in the
share of revenue from Delhi International Airport Limited and Mumbai
International Airport Limited. According to a report released by the Ministry of
Civil Aviation the number of passengers carried by domestic airlines rose from
67,61,000 to 80,56,000 for the period January - February 2009 and January -
February 2010 respectively. The increase in passenger marked a growth of 19.2%
for the aforementioned period. Some of the factors that have resulted in higher
demand for air transportin India include the growing purchasing power of middle
class, low airfares offered by budget airlines, the growth of tourism industry,
increasing outbound travel from India and overall economic growth of India.
Besides this, Indian airports arebeing ranked among the top airports of the world.
International Airport now ranks amongst the top 5 Airports in the world as per
the annual Airport Service Quality passenger survey.
Despite the slowdown and slow recovery, Indian Aviation industry sector still
continues to look promising. This is primarily due to the burgeoning middle class
with increasing massive purchasing power, low cost carriers providing services at
very attractive low fares, the growth of Indian tourism and increasing outbound
travel from India. In addition, the Government has planned to modernize non-
metro airports, phasing out new international routes, putting into place new
airports and renovating existing ones.

8. 8
Since 2006, most of the major Indian airline operators such as Air India, Indian
Airlines, Jet Airways and Kingfisher Airlines have reported large losses, reason
being high aviation turbine fuel (ATF) prices, rising labour costs and shortage of
skilled labour, rapid fleet expansion, as wheel as intense price competition.
Adding to all these problems are the new players entering the industry even
before the existing players could stabilize their operations. India has the highest
passenger growth rate among the entire airlines sector in the world including
economies like Australia and France.
The total number of passengers travelling by air will be a whopping 400 million by
2020." To meet with this accelerated demand, existing players need to increase
fleets and broaden their reach including regional destinations as well. They are
also going to get the competition from international low cost airlines like Air Asia
(Malaysian) and Jet-Star Asia (Australian).
According to the Investment Commission of India, Investment opportunities of
around US$ 110 billion by 2020 are now being predicted. Over the next 10 years,
the Indian aviation sector will try to cash in on the potential to grow by 25%
annually, as said by Praful Patel, the Minister for Civil Aviation.

9. 9
Major players in Domestic Market
Year: Feb,2009.
Year: Nov, 2011.

10. 10
 Year: March, 2013.
Year: September, 2015.

11. 11
Kingfisher Airlines-Company Facts
 Registered Address:
UB Tower,
Level 12, UB City,
Bengaluru, Karnataka,
Pin-code: 560001.
Tel: 080-41585069 080-26262392
Email: investor.relations@flykingfisher.com
Website: http://www.flykingfisher.com
Group: UB Group
 Founded: 2003
 Commenced operations: 9 May 2005
 Ceased operations: Oct 2012 (flights suspended)
Feb 2013: (license revoked)
 Hubs: Bengaluru International Airport
 Secondary hubs: Chhatrapati Shivaji International Airport (Mumbai)
Indira Gandhi International Airport (Delhi)
 Focus cities: Chennai International Airport
Pune International Airport
 Frequent-flyer program: King Club
 Airport lounge: Kingfisher Lounge
 Subsidiaries: Kingfisher Xpress
 Company slogan: Fly The Good Times
 Parent company: United Breweries Group
 Headquarters: The Qube, Mumbai, Maharashtra
 Key people: Vijay Mallya (CMD)
Sanjay Aggarwal (CEO)(quit on 17 Feb 2014)
Prem Kumar Amritnagar (EVP)
 Employees: 5,696 (2012)
 Website: flykingfisher.com (now defunct)

12. 12
Timeline
Kingfisher Airlines was set up in 2003 but hasn't seen a single year of profit
since it got listed in 2006.
Let’s take a look at how the airline put the liquor baron Vijay Mallya on the
rocks.
 May 9, 2005: Kingfisher Airlines’ maiden flight takes off. Alex Wilcox, CEO of
Kingfisher, said the airline would not adopt the low-cost, no-frills model but
chart the middle course.
 June 30, 2005: Becomes the first and only Indian carrier to order the Airbus
A380. Orders five A380s (cancelled subsequently), five A350-800s and five
A330-200s for over $3 billion.
 May 8, 2007: Vijay Mallya eyes stake in Air Deccan.
 June 2, 2007: Vijay Mallya buys over the crisis-ridden no-frills Air Deccan
owned by Capt Gopinath in 2007. The merged group plans to save up to Rs.
300 crore on costs with a combined fleet strength of 71 aircraft. Through a
reverse merger, Kingfisher Airlines became Air Deccan and once the entire
acquisition was completes with necessary approvals from the regulator
SEBI in place, Mr. Mallya quickly changed the airline's name back to
Kingfisher Airlines in 2008.
 August 31, 2009: Kingfisher’s board approves a resolution to raise $100
million (nearly Rs 487.8 crore) by various instruments including Global
Depository Receipts (GDRs). This was in addition to in addition to the
decision for induction of capital for an amount not exceeding Rs 500 crore
by a rights issue of equity shares taken on July 28.

13. 13
 November 4, 2009: Kingfisher reports a net loss of Rs 418.77 crore during
the second quarter of the fiscal. Its income fromoperations also declines by
13.6 per cent during the quarter compared to the same period last year.
In view of the huge losses and capacity reduction, Kingfisher decides to lay
off nearly 100 pilots. The air-carrier later hiked fuel surcharges.
 March 15, 2010: Despite operating losses, Kingfisher announces flight to
Europe.
 September 30, 2010: Kingfisher Airlines appoints Sanjay Aggarwal as CEO.
Mr. Aggarwalis the former CEO of SpiceJet. Mr. Mallya also announced that
staff would be pruned.
 November 25, 2010: Kingfisher Airlines Board approves debt recast
package. The airline’s debt stood at over Rs 6,000 crore.
 September 15, 2011: The Company’s auditors submit an annual report for
2010-11 which pointed out that the loss-making air carrier’s accumulated
losses at the end of the financial year were more than 50 per cent of its net
worth.
 September 28, 2011: Vijay Mallya decides to exit low-cost business.
 November 13, 2011: The airline, with a debt of around Rs 6,500 crore, looks
at cutting costs and taking several steps to face the challenging times.
 November 15, 2011: Kingfisher Airlines loss doubles to Rs.469 crore for the
September 2011 quarter.
 November 20, 2011: Vayalar Ravi says that the Centre has no plan for any
package to salvage the airlines.

14. 14
 December 1, 2011: Mumbai International Airport Pvt. Ltd. sends a notice to
the cash-strapped airlines to pay the Rs.90-crore outstanding dues.
 December 9, 2011: The Service Tax Department freezes 11 accounts of
Kingfisher Airlines for non-payment of Rs.70 crore.
 December 14, 2011: Government de-freezes bank accounts after part-
payment of the service tax dues.
 February 16, 2012: Kingfisher Airlines, reports a loss of Rs.444.26 crore at
the third quarter results for 2011-12.
 February 20, 2012: Kingfisher Airlines cancels several of its flights after
reports of the Income-Tax Department freezing some of its accounts.
 February 23, 2012: The carrier operates a truncated schedule and faced the
prospect of losing a number of prime flying slots.
 March 8, 2012: Another blow to Kingfisher with International Air Transport
Association asking travel agents to immediately stop booking tickets on the
private airline's behalf for failure in settling dues since February.
 March 12, 2012: Further trouble, as employees protest delays in salary
payment.
 March 14, 2012: Vijay Amritraj resigns from Kingfisher board.
 March 15, 2012: Kingfisher announces curtailing of its international
operations.

15. 15
 March 17, 2012: Revenue dept. threatens to take Kingfisher Airlines to
court over alleged service tax evasion, saying the company has not
deposited taxes it collected from travelers.
 March 19, 2012: Anil Kumar Ganguly, the only independent director on the
board of Kingfisher Airlines, quits the company, leaving it with only three
board members.
 March 20, 2012: Mr. Mallya explains the airline's position to the
Directorate-General of Civil Aviation (DGCA) following summons and says
that it is suspending all its international operations.
 March 27, 2012: Burdened by a debt of over Rs.7,000 crore, the airline
suspends operations from Kolkata, Hyderabad, Patna, Lucknow,
Thiruvananthapuram and Bhubaneshwar. The airline operated about 120
daily flights by this date, down from more than 400 earlier.
 March 28, 2012: The airline inducts three independent directors in its board
to comply with the listing norms.
 April 2, 2012: The Company’s staff threatens to go on strike, demanding
payment of salary dues.
 April 3, 2012: The standoff ends with the protestors accepting the
assurance given by Mallya.
 April 9, 2012: Employees, including pilots and engineers, receive salaries
after a delay of nearly four months.
 May 11, 2012: Kingfisher flights cancelled after the pilots report sick to
protest non-payment of salaries.

16. 16
 June 27, 2012: Kingfisher shares tumble over 13% following reports that 34
aircraft have been possessed due to non-payment of lease rentals.
 July 5, 2012: A 15-day time was given by the company’s lenders to come up
with a plan to improve its operations. The airlines had a total outstanding
debt of around Rs.7,500 crore to a consortium of 17 banks led by State
Bank of India (SBI).
 July 14, 2012: Pilots go on strike against the non-payment of wages for
almost five months.
 July 18, 2012: Minister for Civil Aviation Ajit Singh rules out bailout of
Kingfisher Airlines.
 August 8, 2012: A section of its employees strike and 15 flights were
cancelled.
 August 18, 2012: A section of pilots of the near-bankrupt airlines go on
strike, second time in a month, demanding immediate payment of March
salaries, leading to cancellation of seven flights from Mumbai.
 September 4, 2012: Chairman Vijay Mallya gives guarantees worth Rs.
5,904 crore for the carrier’s loans and other liabilities in 2011-12, but did
not get any commission for the same because of lenders’ opposition.
 September 6, 2012: A section of the company’s engineers go on strike
demanding payment of salaries. The airlines’ lenders ask Mallya to spell out
the airline’s revival plan by the end of the month.
 September 9, 2012: Pilots from both Delhi and Mumbai threaten to strike
work as part of mass agitation for immediate disbursal of salaries.

17. 17
 September 26, 2012: Mr. Mallya announces that the carrier was in talks
with overseas airlines for investment.
 September 28, 2012: Turning down a request for Rs.200-croreworking loan
by Kingfisher, the State Bank of India-led lenders consortium, asks SBI
Capitals to chalk out a fresh revival plan for the cash-strapped airline in the
next 2-3 weeks.
 October 1, 2012: Unpaid staff protest in Delhi, Mumbai and other airports
and almost all of Kingfisher’s flights from all stations were cancelled as
engineers did not certify the planes to fly.
 October 2, 2012: Thecarrier declared partial lock-out following a strike by a
section of its employees.
 October 4, 2012: Uncertainty continues over Kingfisher resuming
operations.
 October 5, 2012: Banks give lifeline to the carrier, agreeing to release Rs.60
crore locked in an escrow account to pay employees’ salaries.
 October 6, 2012: DGCA issues show-cause notice to Kingfisher asking why
its flying permit should not be suspended or cancelled.
 October 9, 2012: DGCA asks Kingfisher to stop ticket bookings, following
reports that the airline planned to resume normal operations from October
13.
 October 12, 2012: Commercial banks which had lent over Rs.7,000 crore to
the airlines, closely monitor the situation and tighten the noose around its
promoter to protect their interest.

18. 18
The airline further extends its partial lock-out until October 20 as it could
not persuade the striking employees to join back duty without getting any
salary.
A non-bailable arrest warrant issued against Vijay Mallya, and four other
directors for non-appearance in cases relating to bouncing of cheques
issued in favour of GMR Hyderabad International Airport Limited (GHIAL)
towards user charges.
 October 20, 2012: The airline’s permit got suspended and experts said Vijay
Mallya’s United Breweries group needs to pump in over Rs. 3,000 crore to
get Kingfisher airborneagain as no foreign operator would come forward to
invest in the airline in its present state.
 October 24, 2012: Employees reject the management’s fresh offer and
demand payment of four months’ backlog in lump sum before October 26.
 October 25, 2012: Engineers, technicians and pilots call off their 26-day
strike and agreed to join work immediately by accepting the management’s
offer of disbursal of three months’ salary.
 October 30, 2012: Vijay Mallya meets Civil Aviation Secretary K.N.
Srivastava on the airlines’ revival plan and its intention to resume
operations as soon as possible.
 November 1, 2012: The airlines pay April salary to its employees and the
salary for March was paid the moment the employees called off their strike
on October 25.
 November 9, 2012: The Company’s Q2 loss widens to Rs. 754 crore, as
compared to a net loss of Rs.469 crore in the corresponding period in the
previous year.

19. 19
 November 10, 2012: Mr. Mallya loses Royal Challenge when international
liquor major Diageo announced its decision to acquire 53.4 per cent stake
in Vijay Mallya-owned United Spirits Ltd. (USL) for Rs.11,166.50 crore.
 November 16, 2012: The company starts paying salaries to employees in
batches and employees with low salaries received their May wage.
 December 5, 2012: Trying to help revive Kingfisher, says SBI, the lead
banker in the 17-lenders consortium that extended Rs 7,000 crore loans to
the carrier, and said that the banks are trying to do everything to find an
amicable solution to the carrier’s financial troubles.
Karnataka High Court directs Kingfisher to deposit 50 per cent of the total
amount of Rs.371 crore that the company is required to remit to the
Income Tax Department as tax deducted at source (TDS) from its
employees and payments made towards company expenses.
 December 20, 2012: Kingfisher applies for renewal of its licence that would
expire on December 31.
 December 25, 2012: The Airlines submits an interim revival plan to the
DGCA, seeking approval to take to the skies once again after being
grounded for almost three months.
 December 31, 2012: The carrier loses its flying licence as the DGCA refused
to renew its Air Operator Permit (AOP).
 January 9, 2013: The Company flies into more trouble, with its employees
planning to head to court, a move that came after the management
delayed in paying pending salaries.

20. 20
 January 10, 2013: The airlines’ Chairman Vijay Mallya appeals to his staff to
stay on board, telling them that he was planning a limited restart with
seven aircraft.
 January 22, 2013: SBI’s Chairman Pratip Chaudhuri says that Kingfisher
needs Rs. 2,000 crore for revival.
 February 18, 2013: United Breweries Holdings seeks shareholders’ approval
to provide additional loans of Rs.450 crore to the grounded airline.
 February 21, 2013: The Special Court for Economic Offences, Bangalore,
issues summons to Vijay Mallya on a criminal case filed by the Income-Tax
Department for not remitting to the government tax deducted at source
(TDS).
 February 25, 2013: The beleaguered airlines loses international and
domestic flying slots and the move came close on heels of a decision taken
by the consortium of bankers to start recalling their loans amounting to
Rs.7,500 crore.
 March 10, 2013: DGCA asks the carrier to clear all dues, including pending
salaries of employees, before seeking licence renewal.
 March 15, 2013: Airports Authority of India says it would release the
deregistered leased aircraft of Kingfisher for the lessors only after a formal
nod from the Civil Aviation Ministry.
 March 21, 2013: Civil Aviation Minister Ajit Singh says that Kingfisher has
not yet given a revival plan to restart operations.
 March 27, 2013: DGCA deregisters 15 Kingfisher aircraft.

21. 21
 April 3, 2013: Bombay High Court refuses to grant any interim relief to
United Breweries Holdings, which had filed a petition to prevent Kingfisher
Airlines’ lenders from selling pledged shares of UB group companies.
 April 5, 2013: The airlines' staff protests in Bangalore demanding the
immediate release of their pending salaries.
 June 2, 2013: Three senior Kingfisher executives quit.
 June 8, 2013: Mallya says he cannot pay his employees.
 August 15, 2013: Auditors red-flag Kingfisher’s revival plans.
 September 24, 2013: Kingfisher in talks with foreign investor for potential
stake sale.
 October 29, 2013: Mallya ranks 84th in Forbes India rich list.
 January 7, 2014: Employees of grounded Kingfisher Airlines have intensified
efforts to recover their unpaid salaries.
 February 12, 2014: Kingfisher Airlines reported a net loss of Rs. 822.42
crore for the third quarter ended December 31, 2013.
 February 17, 2014: The CEO of the company, Sanjay Aggarwal quit
Kingfisher airlines.
 July 17, 2014: The Kingfisher was declared to be the top NPA of the country
as it failed to repay loans of over 4,000 crore, mostly borrowed from state-
owned banks.

22. 22
 July 31, 2014: Kingfisher Airlines head Vijay Mallya personally appears
before the Special Court for Economic Offences in Bangalore, in connection
with three criminal cases booked against him by the Income Tax
Department. The court granted him bail while directing him to deposit Rs. 1
lakh as cash surety in each case, bail bonds and solvent surety for the same
sum.
 August 9, 2014: CBI institutes a preliminary inquiry against IDBI Bank and
Kingfisher Airlines. The bank had sanctioned a loan of Rs. 950 crore, despite
KFA having a negative rating.
 August 21, 2014: Punjab National Bank issues notice to KFA alleging the
carrier has wilfully defaulted in payment of outstanding dues of over Rs 770
crore.
 September 1, 2014: United Bank of India declares Vijay Mallya and three
directors of Kingfisher Airlines (KFA) as willful defaulters.
 September 2, 2014: Supreme Court denies relief to KFA challenging the
decision of the Grievance Redressal Committee of United Bank of India
(UBI) to declare the airline and its promoter Vijay Mallya as wilful
defaulters.
 September 4, 2014: Vijay Mallya reiterates his intention to seek legal
recourse in the UBI case, during the Annual General Body Meeting of
United Breweries.
 September 27, 2014: Kingfisher Airlines secures a stay from the Calcutta
High Court on the decision of United Bank of India’s (UBI) Grievance
Redressal Committee, which had earlier declared the airline and its
directors, including its Chairman Vijay Mallya, as wilful defaulters.

23. 23
 December 1, 2014: Centre rejects move to re-appoint Mallya as MD of
Kingfisher Airlines
 December 2, 2014: United Bank of India (UBI) identifies United Breweries
Holdings, the guarantor of grounded airline Kingfisher, as wilful defaulter.
The bank had already declared Kingfisher Airlines and its four directors,
including Mr. Mallya, as wilful defaulters.
 February 24, 2015: A 17-bank consortium led by State Bank of India takes
over possession of the prized Kingfisher House, estimated to be worth
Rs.100 crore.
 April 25, 2015: Alleging fund diversion to Kingfisher and other UB group
entities, United Spirits’ new owner Diageo has asked Vijay Mallya to step
down as Chairman and Director of the Indian liquor firm, a demand he out
rightly rejected.
 April 26, 2015: Mallya says only shareholders can ‘oust’ him from USL
 October 10, 2015: CBI conducts searches at Vijay Mallya's offices. Sources
say raids connected to the case of a Rs. 950 crore loan that IDBI Bank had
provided Kingfisher Airlines
 November 25, 2015: Vijay Mallya has offered banks to pay the principal
amount that he owes but not the interest component and he has
approached the bankers seeking a meeting.
 December 10, 2015: The CBI questions Vijay Mallya as part of the ongoing
probe into alleged wilful default of Rs.900-crore loan in conspiracy with
unknown officials of IDBI bank.

24. 24
 February 16, 2016: PNB declares United Breweries Holdings ‘wilful
defaulter’
 February 19, 2016: As many as four banks are contemplating selling assets
of beleaguered air carrier Kingfisher Airlines to asset reconstruction
companies (ARCs) to recover part of their dues.
 February 27, 2016: The State Bank of India (SBI)-led consortium of lenders
has moved the debt recovery tribunal (DRT) to attach defunct carrier
Kingfisher Airlines’ promoter Vijay Mallya’s passport.
 February 28, 2016: Mallya exits USL but over 2 lakh investors still stuck in
KFA Read more
 March 3, 2016: KFA employees write open letter to Vijay Mallya
 March 7, 2016: Vijay Mallya says he is in talks to settle debt with lenders
The Enforcement Directorate registers a money-laundering case against
Vijay Mallya and the CFO of Kingfisher Airlines A. Raghunathan in
connection with the CBI’s probe into the alleged default of a Rs. 900-crore
loan in collusion with IDBI officials.
The Bengaluru Bench of the Debt Recovery Tribunal temporarily restrains
U.K.-based Diageo Plc from paying $75 million to Mr. Mallya as per the
reported agreement signed with him.
 March 8: 2016: Banks move Supreme Court to ban Vijay Mallya’s overseas
travel
 March 9, 2016: Mallya left India on March 2, government tells court

25. 25
 March 11, 2016: The ED issues summons to businessman Vijay Mallya in
connection with the money laundering case against him, while two of his
former employees were quizzed by the agency. He has been asked to
present himself before the investigating team on March 18.
Refuting the allegations that he was evading the law, Mr. Mallya defends
himself on the micro-blogging site, Twitter.

26. 26
Market Price Analysis
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Open 148.05 137 279.7 41.7 64.05 67 21.5 14.18 4.41 1.37
High 154.9 335 307 73.45 91 67.7 30.9 15.45 5.05 1.94
Low 64 87 22 24.4 39.2 17.55 7.01 3.17 1.2 1.16
Close 136.45 276.9 40.7 63.2 66.2 21.05 14.92 4.27 1.44 1.36
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27. 27
Related News Articles

28. 28

29. 29
Financial Analysis
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30. 30
 Current Assets
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31. 31
Analysis:
1. There was a constant increase in the debt of the company which landed
up-till a total of Rs. 8,657.64 crore in the year 2013.
2. The reserves of the company were positive Rs. 52.99 crore in the year
2008 which constantly kept falling for the immediate next years from
2009 onwards and became negative i.e. Rs -2,496.36 crore in 2009. It
further went down to Rs. -14,281.64 Crore. This indicated that the
stability of the company was shaken in the year 2009 itself.
3. The liquidity position of the company was never strong as compared to
the administrative and the financial expenses it had to bear year by year
and it was going on increasing year by year which finally bought it into a
position where it could not pay the employee salaries and turned in to a
willful defaulter.
4. The profit margin in the airline industry is very-low but the new concept
of low-cost carrier has helped various companies to sustain in the
market. The constantchange in the strategies of KFA from Full Service to
Low Cost to Full service brought it into trouble whereas the competitors
sustained in the market sticking to the one strategy.
5. KFA’s attempt to increase the debt of the company and increasing
number of Boeings i.e. the fixed assets in the year 2009 added to the
losses it was already making increasing the operating expenses of the
company fromRs. 1,781.46 to Rs. 5822.37 crore which was more than 2
times the previous cost. It also resulted to increase in the losses of the
company from a negative Rs. -188.83 to Rs. -1,608.83.
6. In the year 2011, KFA tried to pay-off few of its loans so that it could
renew its license in the year 2012. It tried to reduce its liability and also
reported less loss as compared to 2009 and 2010 but the damage was
already done. Ithas started defaulting on salary payments of employees,
tax dues increased year on year hence it was refused a renewal of
liscence.

32. 32
Reasons for Failure of Kingfisher
 A huge failure
'I am taking things personally,' Vijay Mallya, chairman of Kingfisher Airlines, says
when it comes to running his airline. Perhaps this is one reason why the airline is
in shambles. Lack of delegation is being talked about as the major move that
Mallya did not undertake when running the airline.
 Frequent changes
Unlike his other two major businesses - the spirits and beer segments - which
have been running exceptionally smoothly under the helm of managing directors,
the airline has been crash landing because of one trouble or another with
frequent changes in strategy and direction as well as the absence of no long term
CEO or MD. While Mallya is indeed closely associated with strategic decisions at
United Breweries (UB-India's largest brewer) and United Spirits (India's largest
spirits player), he is understood to have been more than closely associated with
day to day operations of the airline.
 Hit badly:
Started as a full-service carrier, Kingfisher Airlines then added a low-cost model,
expanded it further, only to fold it up and go back to the initial focus of full service
- all this in a period of just six years. 'Long term strategy and laser focus is indeed
essential when it comes to running an airline business. Such frequent change in
focus has not helped the airline, which has also been hit badly by external
factors,' an industry analyst tracking Kingfisher Airlines said.

33. 33
 Strong initial opposition:
When the idea of starting an airline was debated at the UB headquarters, there
was strong opposition from his close aides. But Mallya prevailed. 'We had a series
of discussions and many of us said that if we have to start a new business, mobile
telephony is an option instead of an airline. Leveraging the Kingfisher brand in the
mobile telephony space would have worked wonders to expand our empire, but
somehow we could not convince Mallya out of the idea of an airline business,' a
board level official of UB Group told Business Standard. Even as recent as late last
year, just before the 2G scam broke out in the Indian telecom sector, UB Group
was toying with the idea of licensing the Kingfisher brand to a new mobile
telephony player.
 'Treated as a step-child':
In a recent discussion with Business Standard, Captain GR Gopinath (Left, with
Mallya at a press conference) who sold his low-cost airline Deccan Airline to
Kingfisher Airlines, said that there was a disconnect between the two arms of the
airline models. 'Low-cost aviation business was treated as a step-child. I was
telling Mallya that it is now his child and there should be equal treatment. Post
the merger, whenever there was an Air Deccan and Kingfisher flight at almost the
same time-slots, a decision was taken to do away with the Air Deccan flight in the
hope that the passengers will graduate to Kingfisher full-service. But just the
opposite happened. They went to other LCCs,' says Gopinath, providing yet
another example of Mallya's muddle-headed decision making.
 Pet project:
However, one of the key reasons to acquire Deccan was to get the license to fly
to high-traffic global destinations, a plan which Mallya passionately pursued until
reality hit hard. One pet projectwas a flight from Bangalore to Silicon Valley in the

34. 34
US, connecting the two major technology hubs of the world. There is immense
traffic in this sector, dominated by global airlines and if that move had worked out
it would have benefited Kingfisher to a large extent. It would have also catapulted
Kingfisher Airlines onto the global stage and would have given a global stage for
its beer brand. This didn't happen.
 Curtailing plans:
Mallya also tried his hand at connecting Bangalore to London but had to pull out
as Kingfisher could not sustain this route. Now, Kingfisher flies to Hong Kong,
Singapore, West Asia, London and to a few neighboring countries of India. 'We
are curtailing our plans for global expansions as we are now part of OneWorld
alliance. From London, Singapore and Hong Kong our guests have good
connectivity onwards across the Atlantic and the Pacific. We do not intend to
expand our overseas plans,' Mallya said. 'He started the airline with a lot of
passion and all the troubles have not diluted that. My gut feeling is that he is
unlikely to sell out despite mounting debt and high-level of public angst,' a senior
member of a financial institution who has been funding the UB Group told
Business Standard.

35. 35
References
http://www.financialexpress.com/article/companies/with-highest-ever-load-factor-in-oct-air-india-
leads-industry/9968/
http://trak.in/tags/business/2011/02/22/indian-aviation-industry-stats-indigo-kingfisher/
http://centreforaviation.com/analysis/robust-growth-in-india-domestic-market-fails-to-translate-into-
profits-65480
http://www.civilserviceindia.com/subject/Essay/Kingfisher-Shobhit.html
http://adg.stanford.edu/aa241/intro/airlineindustry.html
Data byICAO(International Civil AviationOrganisation
http://www.ukessays.com/essays/tourism/trends-and-scenarios-in-the-airline-industry-tourism-
essay.php#ixzz43YY7yxn9
http://www.civilserviceindia.com/subject/Essay/Kingfisher-verma.html
http://www.civilserviceindia.com/subject/Essay/Kingfisher-Shobhit.html
http://www.slideshare.net/sucharita1/aviation-world-and-india
https://en.wikipedia.org/wiki/Kingfisher_Airlines
http://www.moneycontrol.com/financials/kingfisherairlines/balance-sheetVI/KA02
http://www.moneycontrol.com/stocks/hist_stock_result.php?ex=B&sc_id=AD04&mycomp=Kingfisher%
20Air
http://www.hindustantimes.com/business/government-considers-system-to-ease-loan-
recoveries/story-8dXbKzWhvF3bNQib1TuxSP.html
http://www.telegraphindia.com/1120706/jsp/business/story_15697586.jsp
http://www.mudraa.com/trading/130913/0/the-curious-case-of-vijay-mallya-and-his-bailout-0305.html
http://www.slideshare.net/sucharita1/aviation-world-and-india
KingfisherKingfisherData.xlsx