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CORPORATE GOVERNANCE FAILURE: AN EMPIRICAL STUDY OF KINGFISHER AIRLINES (INDIA)

Dr. Shailendra Mohan Singh

Assistant Professor

Shyam Lal College (Evening)

University of Delhi (INDIA)

ABSTRACT

Corporate Governance is an emerging and crucial area of modern management due to corporate meltdowns and scams.Corporate Governance is a broad term describing the methods,policies,  structure and process of a company in which the business and affairs of the company are managed and directed. It also eliminates the conflict of ownership and control by separately defining the interest of shareholders and managers.This topic has incited interest since the 90's when a series of corporate collapses like Maxwell,  Enron,Worldcom,  Vivendi, Satyam took place in different parts of the globe and highlighted the misdeeds by the management of the corporations.

Kingfisher Airlines Ltd. was owned by the biggest liquor tycoon of India with an ambition to become an industry leader. Growing share in the aviation market, wide number of destinations and numerous awards, depicted a very attractive and innovative picture for the company. However, due to the severe financial crisis faced by the airline the company has no funds to pay the salaries to the employees and is facing several other issues like fuel dues; aircraft lease rental dues, service tax dues and bank arrears. The main repercussion is the bank loan and interest burden which lead the airlines into an accumulated debt and loss pile of Rs.12000 crore. The biggest mistake of Kingfisher was the acquisition of another airline with a different business model. Kingfisher owed an SBI led bank consortium loan to the tune of Rs.7000 crore, and the effects that this led to the Airlines as well as to the other UB Group companies is shocking.This paper describes the downfall of Kingfisher Airlines and the study of the financial health of United Breweries Holdings.

Keywords: Kingfisher airlines, Vijay Mallya, Aviation industry, Bankrupt.