One of the biggest dramas unfolding in India over the last few days has been surrounding the great escape of liquor baron Vijay Mallya – who, as it has emerged, has fled the country with outstanding debts of Rs 9,000 crore unpaid to a consortium of banks, led by SBI (State Bank of India).
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He made a quiet exit to England on March 2, but there has been an uproar about him since then, in the Parliament and the rest of the country. One of the biggest fears that have surfaced is regarding the fate of IPL team Royal Challengers Bangalore, the franchise which had been bought by Mallya for Rs 476 crore in 2008.
Contrary to some fears, there is almost no chance of RCB being given a ban for the defaulting of Mallya, like Chennai Super Kings and Rajasthan Royals. While there shall be on-field repercussions, there is an ongoing change of ownership in the RCB board room, the culmination of which could take a maximum of two years.
The RCB franchise is a wholly owned subsidiary of United Spirits Limited (USL), of which Mallya had been chairman and non-executive director, till he resigned from his post on February 25. He also resigned from his position as a director of Royal Challengers Sports Private Limited (RCSPL), thus effectively relinquishing control over his team.
His last major contribution towards RCB, the team of which he had become a face of over the years, was the acquisition of Shane Watson for Rs 9.5 crores.
Hindustan Times documents suggest that a major part of Mallya’s loans had been taken against the functioning of RCB, that the tainted loan money was siphoned into RCB’s funds.
In September 2014, RCSPL had passed a resolution at the annual general meeting, where members authorised the board of directors to borrow money not exceeding Rs 500 crore from various banks and financial institutions.
“ …notwithstanding that the money so borrowed together with the money already borrowed by the company (apart from temporary loan obtained from the banker in the ordinary course of business) will exceed the aggregate of the paid up capital of the company…,” the resolution said.
Imminent change of ownership likely, transitional phase to last for maximum 2 years
According to the ‘sweetheart deal’ sealed between Mallya and Diageo, a British alcohol company which has a majority stake in USL, Sidhartha Mallya (Vijay Mallya's son) will be a director of RCSPL, which holds the franchise for the Royal Challengers Bangalore for a period of two years, or till RCB stops being part of the USL Group, whichever is earlier.
Diageo had said when the Indian baron had resigned: "Vijay Mallya will have the honorary title of chief mentor while Sidharth Mallya remains on the board of RCSPL. The members of the board of RCSPL will be able, if they wish, to consult with Dr Mallya".
The RCB board will be presided over by Mallya’s son in what is being seen as a transitional period, before the team is sold to new owners, possibly the steel-to-power conglomerate JSW Group, headed by Sajjan Jindal.
Reportedly, the Jindals have been in talks to acquire RCB for a long time, and it was confirmed last year that they were willing to spend up to Rs 300 crores. It is probable that RCB’s ownership will be transferred wholly from the Siddharth Mallya-headed body to the JSW group in the near future, or that a similar deal will be sealed within the next two years.
If the deal is struck, RCB will be the second team after Deccan Chargers to undergo a change in ownership.
So, who is the current owner of Royal Challengers Bangalore (RCB) IPL Team?
As of now they have made it clear there is no change in ownership pattern in RCSPL which is a subsidiary of United Spirits, which is controlled by Diageo,” the official said. United Spirits said Amrit Thomas, president and chief marketing officer, has been appointed chairman of RCB.
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