United Breweries asks Mallya to step down from board

India’s largest beer brewer, United Breweries, has asked Vijay Mallya to step down from his position as non-executive chairman of its board, as a consortium of 17 banks continue to pursue the tycoon for debts of US$1.4billion.

Vijay Mallya was declared a wilful defaulter in 2014 over initial debts of US$66m

The company, which is controlled by Heineken, requested that the billionaire step down from his position following a board meeting on Wednesday via a filing with the stock exchanges.

It follows a long running battle between Mallya and the Indian authorities, which saw him declared a wilful defaulter in 2014, which led to an arrest warrant and court case which is still ongoing.

Mallya was given the tag by the United Bank of India (UBI) following a long-running court dispute over a loan of US$66 million taken out by Mallya to fund his now defunct Kingfisher Airlines. Mallya denies any wrongdoing.

A consortium of 17 banks led by UBI, is now seeking recovery of over Rs 9,000 crore (US$1.4 billion) from Mallya in debts they claim were accrued by the failed airline before it collapsed into bankruptcy in 2012. Last month they rejected his proposal to repay $600 million.

The “wilful defaulter” tag prohibits an individual or company from accessing banks and capital markets for funding needs.

Diageo has already parted ways with Mallya, who had also served as chairman of United Spirits – a company that Diageo took control of in 2014 after it acquired a 55% stake in the company in a deal worth £1.1 billion.

Mallya agreed to step down as chairman of United Spirits after signing a deal with Diageo that saw him awarded a US$75m payout.

Heineken owns about 43% of United Breweries, which produces Kingfisher beer, having initially acquired 37.5% stake in 2008 through its takeover of Scottish & Newcastle, and later raised its holding.