The board of United Spirits today approved reporting of erosion of more than half of its peak networth to BIFR, the tribunal for sick companies. The spirits maker, once a flagship entity of liquor baron Vijay Mallya, whose brands include Signature, Bagpiper, Antiquity and Royal Challenge, had registered a string of losses for the last four years.
The company is now controlled by world’s largest spirits maker Diageo, which had acquired an additional 26 per cent shares in USL for Rs 11,448.91 crore in July with an aim to take its total stake in the Indian firm to 54.78 per cent. Earlier this month, liquor baron Vijay Mallya was reelected as nonexecutive director and chairman of United Spirits. The company in a regulatory filing said its board has approved reporting to the Board of Industrial and Financial Reconstruction (BIFR) as the accumulated losses at the end of March 31, 2014 stands eroded by more than 50 per cent of the company’s peak networth during the immediately preceding four financial years.
The board has approved the convening of an extraordinary general meeting of the company to be held on or prior to November 29, 2014 in accordance with the provisions of Section 23 of the Sick Industrial Companies Act, 1985 and to take up such other matters in the meeting, it added.
When asked if reporting to the BIFR would mean that the company is on the verge of being declared sick, a company spokesperson said: No, the company is not on the verge of being declared sick. This is a reporting requirement. The board has also approved in principle the potential sale of its Malkajgiri unit in Andhra Pradesh. The board has authorised the management to explore options in this regard and thereafter approach the board for its approval with the proposed plan for the sale, the filing said.
Further, the company’s board has approved the proposal to sell the Palakad unit in Kerala. The board also gave in principle approval to the proposal to monetise surplus assets of the company and has authorised the management to consider the options in this regard. United Spirits Ltd (USL) reported a standalone net loss of Rs 55.58 crore for the three months ended June 30. It had posted a net profit of Rs 118.13 crore during the same period of the previous fiscal. Total income declined by 10.97 per cent to Rs 1,923.90 crore during the quarter, as against Rs 2,161.05 crore for the same period of previous financial year.
USL shares today closed at Rs 2,553.20 apiece on the BSE, up 7.45 per cent from its previous close.