Diageo contractually obliged to back me as USL Chairman: Vijay Mallya
Liquor baron Vijay Mallya, who has been asked to quit from the chairmanship of the board of Diageo-controlled United Spirits, on Monday said he will discuss the issue bilaterally with the world’s largest spirits maker.
“Diageo has contractual obligation to support me as a Chairman and director on the USL Board. Today, with their statement, they have confirmed it. I will discuss the issue with Diageo bilaterally,” Vijay Mallya said. When asked if he will call for a special shareholders’ meeting on the issue, he said: “Let us not speculate. Why should I tell anyone about future course of action. I will discuss with Diageo.”
Reacting to Diageo’s statement earlier on Monday that its contractual obligation to support him was subject to certain conditions, Mallya said: “Let them come out with statement. I will not say anything more than I have already said.” Earlier on Monday, Diageo said its contractual obligations to support his presence would not apply in the event of defaults by the Indian businessman and his group firm UB Holdings Ltd. On Saturday, alleging fund diversion to Kingfisher and other UB group entities, Diageo-owned United Spirits asked Mallya to quit the board, even as the liquor baron outright rejected the demand and the charge. The board of United Spirits Ltd (USL), in which Diageo has bought a controlling 55 per cent stake for about $3 billion, asked Mallya to step down after “various improprieties and legal violations” were found in a probe into loans worth Rs 1,337 crore given by USL to UB Group firms. USL, the erstwhile flagship firm of the UB Group, has already seen a number of exits from its board and top management since the probe was launched by Diageo.
The UK-based liquor giant had first acquired 25 per cent in USL from Mallya-led UB Group in late 2012, while it bought further 26 per cent stake from non-promoters last year. USL said that its board took the decision for ouster of Mallya following an “inquiry” report submitted by its MD and CEO, which revealed that between 2010 and 2013, funds involved in many transactions were diverted from the company and/or its subsidiaries to certain UB Group companies, including in particular, Kingfisher Airlines Ltd.
The company further said that “in the event Mallya declines to step down, the Board also resolved that it would recommend to the shareholders of the company, the removal of Mallya as a director and as the Chairman of the Board.” USL said it would also initiate necessary steps for recovery of the diverted funds while the role of individuals would be determined by the authorities concerned to whom the company will report all transactions. Internal action would be taken against other employees found to be involved in the matter.
United Spirits Ltd’s scrip slides by 2.44% on BSE, 2.52% on NSE
Shares of United Spirits fell by 2.5 per cent on Monday after Vijay Mallya was asked to quit the board over alleged fund diversion to Kingfisher and other UB Group entities -- even as the liquor baron said he intends to continue as its Chairman.
The stock lost 2.44 per cent to Rs 3,330 on the BSE, while at NSE, it went down by 2.52 per cent to Rs 3,330. Asked to quit United United Spirits’ board, Mallya struck a defiant note saying he “intends” to continue as the Chairman and refuted the charges made by the company’s board with regard to its prior-period accounts.