Board room battle at United Spirits; Diageo hardens stand on Mallya as chairman

Monday, Apr 27, 2015,19:52 IST By metrovaartha A A A

New Delhi | The board room battle at United Spirits Ltd, today intensified with UK based majority shareholder Diageo stating it will decide on continuation of  Vijay Mallya as Chairman and director of Indias top alcoholic beverage firm ”in the light of” an inquiry report which alleged fund diversion from USL to Kingfisher and United Breweries.
The USL board , at its meeting on April 25, had  expressed loss of confidence in Mr Mallya and asked him to step down as Chairman and Director.
But Mr Mallya, who once held the majority stake in the USL, refused to step aside stating, Diageo has certain bilateral  contractual obligations with him.
However, in a fresh salvo, UK based worlds largest spirit maker said,  Diageo is the majority shareholder in USL with a 54.78 per cent  holding. While it has certain contractual obligations to support Mr Mallya continuing as non-executive director and Chairman of USL, it was ”subject to certain conditions and in the absence of certain defaults.”
It further stated,  USL has provided its inquiry report and all related materials to Diageo.”Diageo notes the recommendation of the USL board and will now consider its position under its agreements with Dr Mallya and United Breweries (Holdings) Limited  in light of the inquiry report and materials provided to it.”
The share price of USL was hammed down by 3.49 per cent  to Rs 3294.35.
Meanwhile, the market regulator SEBI will consult Ministry of Corporate Affairs and order an independent probe into the allegations about fund divertions from USL to Kingfisher and United Breweries controlled by Mr Mallya, who reportedly said he was hopeful of an early settlement with Diageo.