| Mallya and Chhabria: Kiss and make up
Calcutta, April 24: Kishore Chhabria and Vijay Mallya, friends turned foes, are finally ready to bury the hatchet.
Kishore Chhabria is prepared to sell his 49 per cent stake in Herbertsons Ltd to Mallya “if he is offered the right price.”
“I have already made a comprehensive offer for his stake in Herbertsons,” Mallya told The Telegraph. “I am waiting for his response to it. I am very happy to hear, in the meantime, that he is willing to sell his stake if I pay him the ‘right price’.”
“I have mentioned in my offer that he could have BDA Distilleries in return for his stake in Herbertsons. This implies that the price I have quoted for his stake in Herbertsons takes into account the value of controlling BDA Distilleries,” Mallya added.
Kishore Chhabria said he was in agreement with the formula suggested by Mallya for the settlement of the acrimonious battle, but said he had not received a firm offer as yet.
“Everything depends on pricing, and that's what we have yet to discuss,” Chhabria said.
The deal — should it happen — will bring the curtains down on one of the most bitter dust-ups that Corporate India has seen in the past decade.
Eleven years ago, Kishore Chhabria broke up with his late brother Manu Chhabria and stormed out of Shaw Wallace where he was the managing director. He took with him BDA Distilleries and one of the fastest growing whisky brands of that time — Officer's Choice.
Kishore and Manu were locked in legal battles over the ownership of BDA Distilleries till the latter's death last April — even though they had come close to patching up towards the very end.
After leaving Shaw Wallace, Kishore joined hands with Mallya. He was offered a 26 per cent stake in Herbertsons in exchange for bringing BDA Distilleries and Officer's Choice within the Herbertsons fold.
At present, BDA Distilleries is a 100 per cent subsidiary of Herbertsons.
But by 1996, the two partners started falling out when it became apparent that Kishore had been buying up Herbertsons shares from the market. The shares were bought in small lots and the first lots were transferred in the names of the Kishore-owned entities that had purchased them.
But when Mallya wised up to Kishore’s plan to build up a sizable stake in the company and take it over, he stalled the share transfers. But by then Kishore had built up a formidable 49 per cent stake.
Mallya holds 28.5 per cent in Herbertsons Ltd and has been at loggerheads with Kishore ever since. Mallya alleged that Kishore’s acquisition of an additional 23 per cent stake in Herbertsons was illegal.
This sparked a flurry of lawsuits, petitions to the Company Law Board and the capital market regulator Sebi. The upshot of all this was that Kishore wasn’t allowed to vote on company resolutions to the full extent of his stake holding.
Despite his shareholding in Herbertsons, Kishore achieved a lameduck status and over the past few years he hasn’t even attended the annual general meetings of Herbertsons, fully aware that he would not be able to overturn board resolutions.
Both Kishore and Mallya are now speaking about the need for truce. Mallya said they had started discussing the nitty gritty of the compromise formula through their army of lawyers.
There have been attempts at rapprochement between Kishore and Mallya in the past but they never amounted to much. This time both seem to be serious about clinching a deal that could close a sordid chapter in Herbertsons history.
BDA Distilleries is planning to introduce beers. Senior officials of the company said various options were being considered for production of beer. They mentioned BDA might create a separate subsidiary for it, and seek a foreign ally. BDA is also planning to launch a scotch in India.