The future of Vijay Mallya, the estranged chairman of United Spirits (USL), would be decided by Diageo through a board committee, a senior official at Diageo has said. Catherine James, investor relations head at Diageo, has said that currently Mallya, the chairman of the USL board, doesn’t have any impact on business operations and his future would be reviewed, Motilal Oswal has stated in a report.
The research report, prepared after a call with James, also adds that earlier the company had focused on volumes and going ahead the strategy is to focus on premium brands (profitability driven).
Diageo-led USL had asked Mallya last month to step down as chairman of the firm, after an internal inquiry report into certain doubtful receivables, advances and deposits revealed that funds were diverted from the company to UB Group companies, including Kingfisher Airlines. The inquiry, ordered by USL board last September into certain transactions between 2010 and 2013, suggested that the manner in which certain transactions were conducted, prima facie, indicates various improprieties and legal violations.
USL has received notices from the ministry of corporate affairs and the I-T department for an inspection of its accounts and other books. The largest maker of alcoholic beverages in India has also received a notice from its former auditors, who audited the accounts for the period covered by the enquiry, to understand the impact of the findings of the report on the respective audit reports.
Mallya has refused to resign, saying the inferences and allegations were “unjustified and false” and that the report was based on half-truths and twisted facts against the previous management.
“I do not intend to resign as a director of USL and shall pursue the contractual obligations with Diageo,” he said in a statement. Diageo had said in September, soon after Mallya was re-elected as director at a shareholder meet, that its contractual obligations to support Mallya were subject to him holding a minimum quantity of shares as well as the absence of certain defaults by United Breweries (Holdings) (UBHL) or himself. Most of the people following the developments feel he is posturing tough to secure a better bargain. His holding company UBHL has also been asked by Sebi to restate its accounts for FY14 and FY15.