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D-day set for Vijay Mallya
Shareholders in Diageo-controlled United Spirits Limited (USL) have set a date on which they will decide the fate of company chairman Vijay Mallya.
United Spirits chairman Vijay Mallya (Photo: Wiki)
The USL board of directors will vote on whether to retain Mallya in his role as chairman of India’s largest liquor company company at its annual general meeting on November 24, India’s Business Standard has reported.
The board has also informed Diageo to “expeditiously review” contractual obligations which stipulate that Mallya must be retained in his position at USL, the company he controlled until Diageo bought a 54.7% stake in the company in 2014.
In April this year, the USL board asked Mallya to resign following an internal investigation which implicated him in alleged financial irregularities relating to the diverting of funds from USL to firms from United Breweries Group – which Mallya owns – including the now defunct airline Kingfisher Airlines.
USL said in its 2015 annual report that the company had contractual obligations to support Mallya’s interest in the company as a non-executive director and chairman. However, because the board’s request to Mallya to step down had been rejected, these obligations must be immediately reviewed.
“In the event Dr Mallya declined to step down, the board resolved to request Diageo to expeditiously review the position in relation to its contractual obligations and authorised sharing with Diageo a copy of the inquiry report and all the materials relating to the company’s inquiry,” the report said.
UK-based Diageo, the world’s largest spirits producer, began its move into India when it acquired a 25% stake in United Spirits in 2012. It more than doubled its holding last year, taking its control to 54.7% in a £1.8bn deal. Subsequently it ordered a PwC investigation into the company’s accounts in order to make the business profitable.
The drinks business reported in April this year how Diageo had clashed with Mallya over financial irregularities at the company. Mallya reportedly stormed out of an emergency meeting of the USL board in which company executives called for its chairman to resign.
Diageo has been contacted for comment.