1. USL seeks shareholders’ nod again to report sick to BIFR

USL seeks shareholders’ nod again to report sick to BIFR

Last December, USL had sought approval from its shareholders to report sick to BIFR as its accumulated losses as on March 31, 2015 touched 86 per cent of peak net worth during the past four fiscal years.

By: | New Delhi | Published: June 21, 2016 6:08 PM
United Spirit Limited has narrowed its accumulated losses to Rs 4,186.33 crore in the fiscal ended March 31, 2016, from Rs 5,045.45 crore in 2014-15. (IS: Website) United Spirit Limited has narrowed its accumulated losses to Rs 4,186.33 crore in the fiscal ended March 31, 2016, from Rs 5,045.45 crore in 2014-15. (IS: Website)

United Spirits is seeking shareholders’ nod again to refer it to the Board for Industrial and Financial Reconstruction (BIFR) as accumulated losses breached the 50 per cent of peak net worth during the past four fiscal years.

The largest liquor maker has, however, narrowed its accumulated losses to Rs 4,186.33 crore in the fiscal ended March 31, 2016, from Rs 5,045.45 crore in 2014-15.

“The accumulated losses of the company as on March 31, 2016, is greater than 50 per cent of the peak net worth in the immediately preceding four financial years (Rs 5,849.62 crore),” the company said in a notice to shareholders.

Under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), if the accumulated losses of a company at the end of a financial year have resulted in erosion of 50 per cent or more of its peak net worth during the immediately preceding four financial years, it is required to report to BIFR.

The company is also required to hold a general meeting of its shareholders for considering such erosion, both within 60 days from the date of finalisation of the duly audited accounts.

“Accordingly, the members are requested to consider and approve the enclosed report of the Board of Directors on such erosion and its causes, and the measures being taken as per the relevant provisions of SICA, and also to approve the reporting of such erosion to BIFR in terms of Section 23 of SICA, if applicable,” USL said in a notice to shareholders for an AGM to be held on July 14.

Last December, USL had sought approval from its shareholders to report sick to BIFR as its accumulated losses as on March 31, 2015 touched 86 per cent of peak net worth during the past four fiscal years.

On the EGM held on January 22, 2016, 100 per cent votes were polled in favour of the resolution to report sick to BIFR.

The company said although in the fiscal ended March 31, 2016 it had registered a PAT of Rs 981.16 crore due to certain provisions made by it in the earlier periods, its net worth has eroded more than 50 per cent of peak net worth.

USL cited diminution in the value of long-term investments in subsidiaries and loans and advances to subsidiaries due to low capacity utilisation, negative margins, strategic shift in business; provision on advances to United Breweries (Holdings) Ltd and provision for doubtful debts, advances and deposits among others as reasons for the accumulated losses.

The company’s management, however, sought to assuage the shareholders saying, “the provisioning mentioned in earlier years were mainly due to exceptional historical factors and does not reflect the long term prospects of the company”.

“A strategic revenue mix, strengthened by enhanced brand salience, has steered the company’s growth charter over the past two years… The company has successfully improved both topline and operating profit in a highly regulated and competitive environment, while further strengthening its core brands,” it added.

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