Diageo-owned United Spirits Ltd today said it has written off Rs 566 crore in connection with recovery of funds that were “diverted” from the company and its subsidiaries to Vijay Mallya-led UB Group firms, including defunct Kingfisher Airlines.
USL said in 2013-14 “certain parties had claimed that they had advanced certain amounts to certain alleged UB Group entities and that the dues owed by such parties to the company would be paid/refunded by them to the company only on receipt of their dues from such alleged UB Group entities”.
These dues of such parties to the company were on account of advances by the company “in earlier years under agreements for enhancing capacity, obtaining exclusivity and lease deposits in relations to tie-up manufacturing units agreements for specific projects or dues owing to the company from customers.”
USL, which had initiated a management inquiry into the alleged fund diversion, said “between 2010 and 2013 many of these transactions were diverted from the company and or its subsidiaries to certain UB Group, including Kingfisher Airlines.”
“In connection with the recovery of funds that were diverted from the company and/or its subsidiaries, pursuant to the decision of the board at its meeting held on April 25, 2015 the company initiated steps for recovery against the relevant parties so as to seek to expeditiously recover the company’s dues from such parties, to the extent possible,” it said in a regulatory filing.
During the quarter ended September 30, 2015 the company reached a settlement with one of the parties, after which the party had withdrawn claims aggregating Rs 27.86 crore and accordingly the amount has been written back.
USL said it has also signed settlement agreement with “three other parties” and based on the said settlements has reversed a provision with respect to interest claimed amounting to Rs 26.46 crore.
“Settlements with other parties has not been reached as yet and management is continuing discussions in this regard. During the year ended March 31, 2016 based on its assessment of recoverability, the management has written off Rs 566 crore out of the amounts provided for with respect to the aforesaid counterparties,” the company said.
The management has determined that in light of these provisions no additional material adjustments to the financial results are required on this account, it added.
Earlier, based on the preliminary findings of the internal inquiry USL management had provided Rs 649.55 crore in the financial statements for the financial year ended March 31, 2014 as recoverable amount.