United Spirits Limited (USL), India’s largest liquor maker, is all set to hold its crucial annual general meeting here on Tuesday after almost two months of delay. It decided to convene the AGM after the Registrar of Companies rejected its request for extension of the date owing to investigation by the government into company affairs.
Company chairman Vijay Mallya will be chairing the AGM putting rest to speculation that he might step down from the board of directors. The USL board, in April this year, had asked him to step down after an inquiry report by auditor PriceWaterhouseCoopers (PwC) India indicted him of diverting funds from USL to other United Breweries (UB) Group firms. However, Mallya refused to resign from the board stating that he would pursue contractual obligations with Diageo.
Subsequently, the USL board has recommended to British spirits major Diageo, which holds majority control in USL, to expeditiously review its contractual obligations with Mallya. Both Diageo and Mallya had entered into an agreement in 2012 before Mallya offloaded stake to Diageo. The details of their contractual agreement have not been disclosed.
According to a deal entered between Mallya and Diageo Plc in November 2012, Mallya was to continue as USL chairman for the next five years. Between 2013 and 2014, Diageo Plc, the British liquor giant, acquired a 54.8% stake valued around $2.1 billion in United Spirits, making it a subsidiary.
“Diageo, being a majority owner of USL, will not initiate any move hastily. They will take their next step only after doing a thorough due diligence,” company sources said.
However, the company has not proposed any resolution for removal of Mallya as chairman at tomorrow’s AGM.
“Tomorrow’s AGM is to seek shareholders’ approval for routine business. There is no proposal regarding Mallya’s ouster.