On Saturday, the board of directors of United Spirits said that it ‘had lost confidence’ in Mallya and asked him to step down from his positions in the company and its subsidiaries
MUMBAI : Upping the ante to retain Chairmanship at United Spirits, embattled Vijay Mallya said majority owner Diageo has “contractual obligations” to support his position, even as the British liquor giant said the contract was valid only if there were no “defaults”.
UK-based Diageo, which has spent nearly USD 3 billion for a controlling stake of about 55 per cent in United Spirits Ltd (USL), said it is looking into its “contractual obligations” towards Mallya and his UB Group, but stopped short of making clear its stand on whether it would vote for his ouster.
Diageo also did not clarify whether there have been any “defaults” by Mallya or the UB Group that can nullify the applicability of its “contractual obligations”.
An emergency meeting of USL shareholders looks likely as Mallya has rejected the board’s call for his resignation, even as the alleged irregularities that took place between 2010 and 2013 came under multi-agency scanner.
The boardroom battle at India’s largest liquor maker took its toll on the USL share price, as also on the stocks of various companies of Mallya-led UB Group. Diageo shares also fell on London Stock Exchange in the UK and on NYSE in the US.
Mallya, who is fighting multiple battles for his various ventures including the ‘wilful defaulter’ charges for loans by long-grounded Kingfisher Airlines, has refused to quit and said he will discuss the issue bilaterally with Diageo. 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.
A full-blow boardroom battle broke out over the weekend after USL said it has “lost confidence” in Mallya after an internal probe and a forensic inquiry by PwC revealed alleged fund diversion to Kingfisher and other UB group entities.
USL said “various improprieties and legal violations” were found in the probe into loans worth Rs 1,337 crore given to UB Group firms and it asked Mallya to quit the board.
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 shares from non-promoters last year.
