(Diya TV) — Sahara Group chief Subrata Roy and UB Group chairman Vijay Mallya are both larger than life personas. They’re appetites for big risk investments, often with the financial backing of borrowed money, and petulant love for the media spotlight have landed the two of them in fiscal ruin, scraping the bottom of the barrel while looking for a way out.
Subrata, who has sat idle in the Tihar Jail, Delhi, since March of 2014, is fighting day and night to raise the Rs 10,000 crore bail amount that’s been set for his conditional release — since August of the same year, Subrata has made multiple attempts to liquidate some of his hotel properties in an effort to raise the money. His lawyers recently told India’s Supreme Court that Rs 17,000 crore of the Rs 30,000 crore raised from investors without the Security Exchange Board of India’s approval has already been returned.
Though he’s not sitting in a jail cell, Mallya faces an equally as complicated dilemma. Tuesday, his lawyers told the apex court that a one-time settlement with banks he’s in debt to is possible. He’s offered to pay Rs 4,000 crore of the Rs 9,000 crore he and his companies owe the 17-member consortium of banks, by September of this year. The State Bank of India, who leads the consortium of banks, said they would examine Mallya’s offer.
Of all his assets, Mallya’s 8 percent stake in the beer maker United Breweries is the most valuable — at its present value, his stake is worth around Rs 1750 crore. However, 98 percent of his stake in the company has already been pledged, according to stock exchange disclosures. He also owns real estate in India, the U.S. and Europe — liquidation of some of these properties in honor of the Rs 4,000 crore deal seems like a reasonable scenario.
Showing Mallya favoritism could set a rather dangerous precedent, other willful defaulters may expect similar treatment and a similar deal in the future. According to reports published in December of last year, the size of “stressed assets” in the Indian banking sector are close to Rs 7 lakh crore. Should the banks accept Mallya’s deal, in theory, it would send the message that other banks might be in the position to offer the same with other defaulters. Finance minister Arun Jaitley said twice in the month of March that every last penny of what Mallya owes will be collected and later, in more general terms, said banks are empowered to take “coercive action” to recover their dues.