Alleging fund diversion to Kingfisher and other UB group entities, Diageo-owned United Spirits Saturday asked its erstwhile promoter and current Chairman Vijay Mallya to quit the board — even as the liquor baron outright rejected the demand and the charge.
The board of United Spirits Limited (USL), in which Diageo has bought a controlling 55 per cent stake for about USD 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.
Mallya has been in the dock ever since his ambitious airline venture Kingfisher landed in financial troubles and got eventually grounded in October 2012.
Thereafter, Mallya had to sell some of his assets, including controlling stake in USL to Diageo.
In September last year, the board of United Spirits ordered a probe into the loans given to UB Group companies as it posted a whopping net loss of Rs 4,488.77 crore for the financial year ended March 31, 2014.
Mallya, who is already battling a number of cases including against banks over ‘wilful defaulter’ tag related to loan defaults by Kingfisher, refused to resign and said the inferences and allegations are unjustified and false.