The United breweries Group which was Founded in 1857 by Dr. Vijay Mallya and Headquartered in UB City, Bengaluru.

UB group has followed conglomerate diversification and entered into different new segments. It has diversified Products portfolio
including Breweries, Alcoholic Beverage, Sports, Aviation, Chemicals & Fertilizers under its different Subsidiaries i.e United Breweries
Ltd • United Spirits Ltd • Kingfisher Airlines • Mangalore Chemicals & Fertilizers Ltd • Royal Challengers bangalore • Sahara Force India

I will be focusing more about Kingfisher Airlines due to the time constraint as kingfisher was found out to be the main factor for failure
of main business :
Kingfisher Airlines was registered in 2003 and started its operation on 9 th May 2005 with motto to consistently deliver a safe, value
based and enjoyable travel experience to all its guests.
On December 19th 2007 Kingfisher Airlines acquired entire 46% of Deccan Aviation to start international flights and started its
international operations on 3rd Sep 2008. In 2010, Kingfisher announces flights to Europe despite losses. And indigo started gaining
market share.
In 2011: The income for year stood at approx. INR 13.4 Billion which was lowest since 2007 and the losses increased sharply to INR 4. 4
Billion. They simply blamed rising fuel costs. Many pilots left the company for rival airlines and thereafter kingfisher flights were
suspended in oct 2012 and its license was revoked in Feb 2013.
The failure can be attributed to several factors :

1. Expanding beyond the core competencies and getting into denial of risk when things start going wrong.
a. Unrelated Business Diversification from Liquor to Airlines..? Inexperience in the aviation sector

a. Maintenance, Landing and Navigation Cost for Kingfisher Airline’s was about 2% higher in 2011 and 3% higher in 2012
than Jet Airways
b. High Overhead Costs : In 2012, Kingfisher Airlines was spending 11.50% of their revenue on their Employee which was
much higher than other airlines. In the same year Jet Airways was having Employee to revenue % as 9.3%.
2. Putting personal image/ preferences over the interest of organization and all stakeholders.
KFA’s cost for Value Added Services were much more than other airlines, while they focused less on scheduling, connectivity,
cleanliness and low price, the basic needs of Indian Customers.

3. Failure to understand the different industries and thinking that the success of one can easily be replicated in the other which led
to
b. Bank Dues: 7000 Crores plus
c. Fuel Dues: For kingfisher fuel expenses were 50.58% of their revenue in 2012 and fuel payments in 2012 was 31.78% of
their total expenditure and was 28.37% in 2011
d. Delayed Salary : KFA delayed salaries in Aug 2011 and there was a point when salaries to employees were due for more
than 4-5 months(Oct’11- Jan’12), Engineers refused to sign the ‘Tech Log’, which is mandatory to certify that aircraft is fit
to fly before every flight. When this was brought to the attention of DGCA, they cancelled the KFA license.
e. Aircraft Rental Dues: Since 2008, KFA was unable to pay aircraft rentals on time. Due to that 16 out of 66 aircrafts had to
be grounded.
f. Airport Dues: AAI sent notice to KFA in Feb 2012 regarding accumulated dues of 255.06 Crs. The airline was operating on
cash & carry for the last 6 months with daily payment amounting 0.8 cores.
g. Service Tax Dues : On 9th Dec 2011, Central Board of Excise and Customs announced that they would take legal action
against Kingfisher for not paying service tax. On 10th Jan 2012, KFA had service tax arrears of 70 cores

4. Failure to understand and estimate the changing trends, consumer preferences and cost curtailing to improve profitability
h. Unrealistic Market Analysis: “Luxury sells”, was a mistake.
i. Merger with Air Deccan: led to Higher operational costs post merger • Hurry in internationalisation. And failed to create
Brand identity: Premium or Economy..
j. Diversified Aircrafts: Diversified Aircrafts with different Capacities vis-à-vis standardized aircraft of other Airline companies