Mallya, once the self-proclaimed "King of Good Times", made his fortune in the liquor business and controls a conglomerate spanning beer, airlines, fertilisers and engineering.
But in several firms in his United Breweries Group, 58-year-old Mallya's ownership has substantially shrunk, while in others, large portions of his holdings are pledged with banks -- and in some cases are starting to be sold off.
"The legacy of the empire, which he inherited from his dad, is at risk," said a Mumbai-based analyst from a group that has lent to Mallya's companies, asking not to be named.
Mallya, owner of a Formula One team and host of lavish yacht parties with Bollywood stars and politicians as guests, was India's 29th richest man in 2007, worth an estimated $1.5 billion, according to Forbes.
But pressure on Mallya has mounted over the past two years since Kingfisher Airlines' fortunes went into a downward spiral, hit by high fuel prices, fierce competition and heavy interest costs.
The company, which has never made a profit since it began flying in 2005, owes vast sums to banks, airports, fuel suppliers and staff, while owners of Kingfisher's grounded planes have taken them back.
Bitter legal battle
Last year, banks which say they lent more than $1.5 billion to Kingfisher started demanding immediate repayment after Mallya failed to come up with a convincing airline revival plan.
Mallya is now in a bitter legal battle with lenders to prevent them from selling properties and assets given as security against loans, which the banks say include his beloved personal villa in Goa.
As part of a money-raising strategy, Mallya in 2012 abandoned control of his United Spirits to British drinks group Diageo -- although a court has since annulled the decision in response to a petition from Kingfisher creditors chasing their dues.
Meanwhile, Dutch brewer Heineken last year upped its holding in United Breweries, which makes Kingfisher beer, to near 39 percent, overtaking Mallya's stake.
"These are difficult times for the Mallya group," said Sonam Udasi, head of research at Mumbai brokerage IDBI Capital.
Mallya took over the United Breweries group in 1983 when he just 28 after his father died. After re-launching the Kingfisher beer brand and consolidating arms of the business, he expanded into aviation.
Mallya is reportedly still keen to find an outside investor to get Kingfisher back into the air, a year after India liberalised investment rules for foreign airlines, but no deals have materialised.
Airline staff, some of whom have not been paid for 15 months, have little faith in his intentions.
"If he wants to shut the airline, do so. But pay us first," a Kingfisher engineer, asking not to be named, told AFP.
Low-key birthday
There is also talk Mallya may also end up a minority shareholder in his fertiliser business, Mangalore Chemicals and Fertilizers.
As Mallya struggles to stay on top of his business, his appearances have become rarer -- he celebrated his birthday in uncharacteristically low-profile style at his south Mumbai home in December.
Kingfisher spokesman Prakash Mirpuri declined to comment on Mallya's financial future, although analysts say it may be too early to write his empire's epitaph.
Forbes magazine in October said Mallya's net worth had halved to $750 million, but that rising stock prices of United Breweries have kept him "afloat".
In need of cash to recover their dues, lenders are eyeing Mallya's personal properties, analysts say -- but this would depend on the extent, if any, of Mallya's personal guarantees for the loans.
Mallya has argued that it is the airline that owes money, and not him personally.
In India, recovery of sums through the legal system is time-consuming but "it's better than countries like China and Indonesia," said H. Jayesh, founder-partner at advocate firm Juris Corp.
India's government has told banks to be firm against "wilful defaulters" -- those able but unwilling to pay or who have diverted loan proceeds for unstated purposes.
Mallya has not yet been declared a defaulter. But both the Reserve Bank of India and the government want to send a message to corporate India that the country cannot "afford to have affluent promoters and 'sick' companies", the finance minister said last year.
Banks could recover dues from Mallya if they are "really serious and there is no political interference", said Jayesh.
But "it will take time as you will need to go after individuals and their assets around the world", he said.
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