Vijay Mallya has resigned as chairman and non-executive director of United Spirits (USL) under an agreement with the company with effect from February 25, 2016. USL has appointed Mahendra Kumar Sharma to replace Mallya as the chairman of the board. The company held a conference call on February 26 to discuss the matter.
The management stressed on the call that Mallya’s exit will end the uncertainty relating to the corporate governance and to the ambiguity surrounding certain historical transactions. Management also said that United Spirits is not responsible for the payment of the settlement to Mallya.
The agreement allows for the termination of certain agreements to which USL was party prior to Diageo’s acquisitions and that were rejected by shareholders in November 2014. However, there are three exceptions – An advertising agreement with Watson Limited, payment of fees under a sponsorship agreement with United Mohun Bagan of Rs 6 million and a refund of a call option fee of Rs 281.3 million. On the call, management clarified that the advertising agreement with Watson Limited is more of an accounting arrangement.