Crisis ridden United Spirits Ltd (USL) today said it has received shareholders’ nod to issue a guarantee to a bank for loan of up to Rs 100 crore to be a availed by its subsidiary Pioneer Distillers.
In a filing to NSE, United Spirits said the resolution for consent approval of the shareholders to give guarantee and/or provide security for a bank loan of up to Rs 100 crore to be availed by its subsidiary Pioneer Distillers Ltd from Standard Chartered or such other banks, and was passed with a majority.
As many as 99.5 per cent of votes polled were in favour of the resolution, the company said.
Last month, Diageo-owned United Spirits sought approval from its shareholders to report sick to BIFR as its accumulated losses as on March 31 touched 86 per cent of peak net worth during the past four fiscal years.
As per the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), if the accumulated losses of a company, at the end of any financial year have resulted in erosion of 50 per cent or more of its peak net worth during the preceding four financial years, such firm is required to report to the Board for Industrial and Financial Reconstruction (BIFR).
In a notice to the shareholders for an EGM on January 22, United Spirits said, as per the audited annual accounts for the fiscal ended March 31, “the accumulated losses of the company as at March 31, 2015 is 86 per cent of its peak net worth during the four financial years preceding the financial year ended March 31, 2015”.
“Accordingly, this extraordinary general meeting (EGM) is being convened to consider and approve the enclosed report of the Board of Directors on such erosion and its causes, and the measures being taken as per the relevant provisions of SICA, and also to approve the reporting of such erosion to BIFR in terms of Section 23 of SICA,” it added.
The company said its accumulated losses as on March 31, at Rs 5,045.45 crore is greater than 50 per cent of the peak net worth in the immediately preceding four financial years at Rs 5,849.62 crore.