Mallya's 'associate' white knight for Kingfisher

Vijay Mallya recently said he would tide over the crisis in Kingfisher Airlines with the help of some associates for whom he created wealth in the past.

Though the UB Group chairman didn't name anybody, some of these associates could be the owners of Balaji Distilleries, whose breweries and distilleries were acquired by UB Group companies -- United Spirits and United Breweries -- during the last financial year.

These associates during the past few months have invested a little over Rs 700 crore (Rs 7 billion) as part of the promoters' equity infusion into Kingfisher Airlines and there are indications they may support the airline further.

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But, who are the owners of Balaji Distilleries and why are they backing Mallya?

They have been associated with the UB Group for the past five decades and have been associates of the two pillars of UB Group, for their brewery and spirits businesses.

The promoter of Balaji Distilleries is M Sreenivasulu Reddy, a businessman based in Chennai, who has businesses spanning a few other sectors besides distilleries and entertainment.

Reddy was also earlier involved in shipping.

During the recent RBI-approved debt recast package for Kingfisher Airlines, there was a mention of issuing and allotting up to 20 million eight per cent optionally convertible debentures of Rs 100 each to Star Investments, in consideration of the extinguishment of the amount due to Star Investments from the company.

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Star Investments is a Balaji Distilleries promoter arm, as listed in the latest balance sheet of United Breweries.

Star Investments, along with two more companies, Margosa Consultancy and Redect Consultancy, invested a total of Rs 708 crore (Rs 7.08 billion) as part of the debt recast package of Kingfisher Airlines.

United Spirits, flagship spirits business of the UB Group, acquired Balaji Distilleries in a total stock transaction last year, valuing the company at around Rs 400 crore (Rs 4 billion) at that time.

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United Spirits offered a total of 5.2 million shares worth Rs 800 each as part of the acquisition.

Balaji Distilleries came into the fold of United Spirits with distilleries and breweries, the latter of which United Spirits demerged to United Brew-eries.

Balaji Distilleries was a publicly held company at that time and came into the UB Group fold with capacity to brew and distill millions of cases of beer and spirits.