Meanwhile, it has been confirmed that Mallya's United Spirits Ltd is in talks towards selling a stake to UK-based Diageo Plc, the world's biggest spirits group, the companies said in statements.
Mallya has been scrambling for nearly a year to raise capital for his ailing Kingfisher Airlines Ltd, prompting market speculation that he may need to sell stakes in United Spirits or United Breweries Ltd, maker of his flagship Kingfisher beer.
United Spirits and Diageo held talks towards a deal that ultimately collapsed in 2009, and the companies said on Tuesday that the current negotiations might not result in a deal.
"There is no certainty that these discussions will lead to a transaction," United Spirits, the world's largest spirits maker by volume, said in a statement to India's stock exchanges.
Diageo is looking initially to buy a 15 percent stake from Mallya, who owns about 28 percent of the company, and a further 10 percent from investors, one banker familiar with the matter told Reuters on Tuesday.
Mallya would retain a minority stake after the deal, sources have said.
Diageo may offer 1,200 rupees to 1,300 rupees a share, valuing the 25 percent stake at 42.5 billion rupees, sources have said, declining to be identified because the talks were confidential.
Shares in United Spirits rose 2.4 percent on Tuesday to 1079.30 rupees and have more than doubled in 2012, with much of those gains coming in the past four months.
If it acquired 25 percent of United Spirits, Diageo would have to launch a mandatory open offer for at least 26 percent more of United Spirits in order to bring its stake to 51 percent.
Diageo is known to covet deals in which it sees a path to control, which Mallya has long been seen to be unwilling to cede.
United Spirits was holding its annual shareholders' meeting on Tuesday in Bangalore, and Mallya did not stop to speak with reporters on the way in.
While Kingfisher's lenders have been putting pressure on Mallya to bring in capital, one analyst said he did not think any sale proceeds from a deal for a stake in United Spirits would be injected into Kingfisher.
"This has nothing to do with Kingfisher Airlines," said Sharan Lillaney, an analyst at Angel Broking who tracks both United Spirits and Kingfisher Airlines.
"This is solely for United Spirits. Why would he put good money after bad money? They are doing a stake sale basically to get United Spirits out of a high-debt position that it is currently in," he said