United Breweries (UBL), India’s largest beer maker, has asked Vijay Mallya to step down as non-executive chairman with immediate effect. The decision was taken at a board meeting on Wednesday.
“I am directed by the Board to convey that in order to comply with the Sebi order, and in the absence of any stay or vacation of the said order, the Board is compelled to request you to step down from the Board of United Breweries with immediate effect,” Govind Iyengar, UB’s company secretary and VP-legal said in a letter to Mallya.
Market regulator Sebi in its January 25, 2017, order had restrained Mallya from holding the position as director or key managerial position of any listed company. Subsequently, the BSE and NSE had sought the status of compliance from UBL.
The Board took on record the minutes of the meeting of the independent directors held on February 6 at Mumbai and also the mail sent to Mallya by the company on that date. Further, the Board deliberated the matter and obtained legal opinions obtained in this regard. It was thereafter agreed to ask Mallya to step down.
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The board decision has come as a double-whammy for Mallya following the Karnataka HC order for winding up of his holding company United Breweries (Holding) for failure to pay back close to R9,000 crore to various creditors. When contacted, Mallya’s office in Bengaluru did not respond.
Q3 net falls 32%
United Breweries on Wednesday reported a 32% decline in standalone net profit to R48.5 crore for Q3 ended December 2016. Revenues, however, grew 1.2% to R2,231 crore compared to R2,204 crore a year ago. Its operating profit also declined 49% to R58 crore from R114 crore a year ago.
“Excise duty increases in several states, pressure on cost of materials consumed resulted in a drop in Ebitda and profits. Unfavourable market conditions in Q3 adversely affected earnings. Demonetisation also resulted in both UBL and the industry volume was down by 8%,” the company said.