Yesterday attended a leadership program at South Mumbai. It was great to hear how the Indian companies have continued to aspire generations through Leadership. They are well known brands across the globe and some of them are pioneer in themselves.
Coming back to the topic Kingfisher, on the basis of personal vanity, and continued vanity is now shrinking Vijay Mallya business from empire to kingdom as Kingfisher’s Rs 7,000 crore dues force him to sell large parts of his better businesses bit by bit.
The short point is this: in his blind pursuit of a “sexy” hubris-driven business like civil aviation, Vijay Mallya is now about to lose his crown jewels. His is a classic demonstration of management guru Jim Collins’ five-stage process of letting a business slip from success to failure. Only, in his case, Mallya has lost more than just one business. He is losing half his empire.
In How the Mighty Fall, Collins, author of several best-selling books on corporate success and failure (Built to Last, Good to Great), gives five broad reasons why top-performing companies lose their way and collapse to either mediocrity or even bankruptcy.
Of the five reasons, the first two relate to the causes of failure (management hubris, leading to over-reach and expansion beyond the core) and the other three to how managements respond to crisis when things start going wrong (denial of risk, grasping at straws for salvation and capitulation to irrelevance).
In Mallya’s case, he has not only managed to qualify on all five counts, but has added several bits of foolishness of his own. Jim Collins will have to add a few chapters when he learns about the Mallya mishaps.
The King of not so good times has been declared as India’s first Wilful Defaulter.
So who is a wilful Defaulter:-
The reserve bank of India defines A “wilful default” would be deemed to have occurred if any of the following events is noted:-
(a) The unit has defaulted in meeting its payment / repayment obligations to the lender even when it has the capacity to honour the said obligations.
(b) The unit has defaulted in meeting its payment / repayment obligations to the lender and has not utilised the finance from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes.
(c) The unit has defaulted in meeting its payment / repayment obligations to the lender and has siphoned off the funds so that the funds have not been utilised for the specific purpose for which finance was availed of, nor are the funds available with the unit in the form of other assets.
(d) The unit has defaulted in meeting its payment / repayment obligations to the lender and has also disposed off or removed the movable fixed assets or immovable property given by him or it for the purpose of securing a term loan without the knowledge of the bank/lender.