In a double-whammy for flamboyant businessman Vijay Mallya, the government has annulled his re-appointment as Managing Director of Kingfisher Airlines while he also had to quit from board of another group company MCFL.
This comes close on the heels of minority shareholders of United Spirits, once a prized entity of Mallya-led UB group, rejecting proposals regarding proposed financial dealings of the company with entities connected to him.
Kingfisher, which had to be grounded in October 2012 due to severe financial crunch and mounting debt, had sought the Corporate Affairs Ministry’s approval for Mallya’s re-appointment for a period of five-year beginning October 16, 2013 “without remuneration”.
The airline said in a regulatory filing today that its application has been rejected, but did not disclose any specific reason.
Government sources, however, said that the decision was taken because Kingfisher failed to get necessary approvals from its lenders and shareholders for the re-appointment.
The disclosure came on a day, when another UB Group firm Mangalore Chemicals and Fertilizers Ltd (MCFL) announced Mallya’s resignation as a director without giving any reason.
Trading in shares of Kingfisher and another group firm UB Engineering also got suspended with effect from today because of the companies’ non-compliance to listing norms.
Kingfisher, which once prided itself as the most luxurious airline with Mallya being known as the ‘King of Good Times’, alone used to command a market value of over Rs 10,000 crore once, but now stands at just about Rs 100 crore.
The overall UB group market value has tanked by over half in the past one year, while excluding United Spirits.
The penal action by stock exchanges followed the companies’ inability to prepare and publish financial results in time, which the firms have attributed to lack of staff.
Kingfisher has previously faced strong staff protests for non-payment of salaries, while it is also under regulatory scanner for various accounting lapses.
As per the latest disclosures made to the stock exchanges, Mallya was serving as Chairman and Managing Director of Kingfisher, which has been without a full-time CEO ever since Sanjay Agarwal left the company early this year.