King's Experiment with Truth

Vijay 'King of Good Times' Mallya promoted Kingfisher Airlines seems to be heading the headlines for all the wrong reasons in recent news items.
Accumulated Losses.... Huge Debts..... and Bankruptcy.

What is the reason?
No its not Deepika. (There is a joke going on facebook- Deepika dated Yuvraj and he lost his form, she dated Ranbir and he did some crappy movies and then she dated Siddharth mallya- well company hi duba di bechare ki)

The actual reason was highlighted by Mr. Warren Buffett some 28 years back (in his 1983 letter to shareholders). Here is the relevant portion-
"

Businesses in industries with both substantial over-capacity and a commodity product (undifferentiated in any customer-important way by factors such as performance, appearance, service support, etc.) are prime candidates for profit troubles. These may be escaped, true, if prices or costs are administered in some manner and thereby insulated at least partially from normal market forces. This administration can be carried out (a) legally through government intervention, (b) illegally through collusion, or (c) “extra legally”

through OPEC-style foreign cartelization.
If, however, costs and prices are determined by full-bore competition, there is more than ample capacity, and the buyer cares little about whose product or distribution services he uses, industry economics are almost certain to be unexciting. They may well be disastrous."

Here is another one which you should have listened to, Mr. Mallya (From 1980 Letter)-

When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, generally, it is the reputation of the business that remains intact.

Now what?
Either government bailout or more equity or bankruptcy. Lets see what happens. 

Just wishing that I am not the one to pay the tuition fees for your education!!!