Amid mounting troubles, UB Group chief Vijay Mallya is likely headed for a long-drawn battle at United Spirits (USL) after Saturday’s boardroom showdown at the liquor company where he was asked to resign as chairman.
Mallya has refused to resign citing his agreement with Diageo Plc, which controls USL, and said that a report by PwC — which was part of an internal inquiry that led to the board’s call for him to step down — was severely flawed and would be challenged.
“The report being referred to has been done by our forensics team for Diageo. We stand by the work done and believe it to be of the highest professional standards,” said PwC in a reaction to Mallya’s statements.
“I have a valid contractual agreement with Diageo Plc which directly addresses my position as director and chairman of USL. I will discuss this bilaterally with Diageo Plc and not in the public domain,” Mallya said in a late night statement on Saturday, adding that he intended to continue as chairman of USL in the normal manner, including chairing monthly operating review meetings and board meetings.
“I think this is going to be long drawn,” said Amit Tandon, founder and managing director of Institutional Investor Advisory Services India, a proxy advisory firm. “There are different permutations and combinations it can take and some of the issues are untested in the Indian market.
There is a lot which is not in the public domain and therefore it is difficult to get a full sense of all the ramifications,” he said.
“I also reiterate that the accounts of USL for the prior years have been correctly stated, audited without qualification and approved by the Board of Directors and shareholders,” Mallya said.