Mumbai: Amid a boardroom battle at Diageo-owned United Spirits to oust Chairman Vijay Mallya, shares of the company as also that of various UB Group firms including long-grounded Kingfisher Airlines fell sharply today. USL shares were down 3.5 per cent after its board asked Mallya to quit over alleged fund diversion to Kingfisher and other UB Group entities — even as the liquor baron refused to oblige and said he would continue as Chairman and Director.
After falling 3.87 per cent to Rs 3,281 in intra-day trade on the BSE, shares of United Spirits finally ended at Rs 3,294.35, down 3.49 per cent from its previous close. On the NSE, it closed 3.45 per cent lower at Rs 3,298.20. The company’s market value went down by Rs 1,729.95 crore to Rs 47,876.05 crore. Weakness was also seen in stocks of various companies from Mallya-led UB Group. Shares of United Breweries Ltd plunged 12.18 per cent, while United Breweries (Holdings) Ltd tumbled 4.46 per cent.
Kingfisher Airlines’ stock fell by 4.86 per cent to Rs 1.76. The stock trades only on Mondays after its suspension. Shares of UK-based Diageo, which has acquired controlling stake of nearly 55 per cent in USL for USD 3 billion, also slipped at the London Stock Exchange.
Mallya on his part said that only “shareholders can oust a Director” and he would continue to function as USL Chairman “in the normal manner”. Alleging fund diversion to Kingfisher and other UB Group entities, United Spirits’ board had on Saturday asked Mallya to quit the board. The company said it has “lost faith” in Mallya and would go to shareholders if he refuses to resign. Mallya continues to own a small stake of 0.01 per cent in his personal capacity. Some of his UB Group firms also continue to hold stakes totalling to about 3 per cent.
The USL board 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. 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.
